New GIPS Handbook — with Addition of Hedge Fund Guidance — Offers Most Comprehensive Resource for GIPS Standards

Categories: Global Investment Performance Standards (GIPS®)
Jonathan Boersma, CFA

The recently released third edition of the Global Investment Performance Standards (GIPS) Handbook is a must have for any firm that complies with the GIPS standards. The 450-page handbook includes more than 100 pages of new interpretations and guidance that firms must follow to comply with the GIPS standards, including detailed guidance on each of the individual requirements and recommendations within the standards.

The handbook includes all existing guidance statements, making it the most comprehensive resource for the GIPS standards available to date. One of the most highly anticipated new guidance statements, covering the application of the GIPS standards to alternative investment strategies and structures, is also included in the handbook. Not surprisingly, the hedge fund community has eagerly anticipated this guidance, which provides specific direction on the following:

  • Valuations when investments are not fully liquid
  • Frequency of portfolio valuations
  • Estimated versus final values
  • Return calculations
  • Treatment of fees in a master-feeder structure
  • Treatment of master-feeder structures with regard to composite construction
  • Benchmarks
  • Risk Measures
  • Segregated investments (“side pockets”)

The 2010 edition of the GIPS standards, which became effective on 1 January 2011, included numerous new requirements and recommendations, such as the requirement to use a fair value framework for valuations and to present the three-year ex-post standard deviation. Guidance for these new provisions and relevant Q&As are included as part of the updated handbook. As with the 2010 edition of the GIPS standards, great attention was paid to making the language and use of terms consistent throughout the handbook. Our hope is that this will reduce confusion and help firms as they apply the standards.

In addition to being available for purchase in hard copy, the 2012 GIPS Handbook is available electronically in both PDF and e-book formats. We believe that making this resource widely and freely available will benefit the industry and contribute to the advancement of the mission of CFA Institute. Besides, who doesn’t want a copy of the GIPS Handbook on their mobile device so they can reference it wherever they are?


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3 comments on “New GIPS Handbook — with Addition of Hedge Fund Guidance — Offers Most Comprehensive Resource for GIPS Standards

  1. Jonathan Boersma, CFA said:

    Thank you for your question regarding the GIPS standards and the CFA curriculum. The GIPS Handbook offers guidance and interpretation of the 2010 edition of the GIPS standards. The CFA exam questions are written to the specific curriculum you received for a particular exam. Some of the concepts in the study sessions may be superseded by updated rulings, pronouncements, or guidance that is issued after a reading was published. Candidates are not responsible for changes that occur after the material was published. So focus on what is included in the curriculum. Best wishes as you prepare for the exam.

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