Views on improving the integrity of global capital markets
12 October 2016

The Evolution of the GIPS Standards: Introducing GIPS 20/20

The sold-out 20th Annual GIPS® Standards Conference attracted more than 400 attendees from 27 countries. Carl Bacon, CIPM, chair of the GIPS Executive Committee and chair of StatPro Group, and Jonathan Boersma, CFA, executive director of Global Investment Performance Standards, CFA Institute, gave the key note address in which they shared the vision for the evolution of the GIPS standards.

GIPS 20/20 — Vision for the Future


The last update of the Global Investment Performance Standards (GIPS) was in 2010, as Jonathan talks about in his blog post about the four toughest questions facing the evolution of the GIPS standards.

The success of the GIPS standards is undeniable, with industry organizations in 38 countries endorsing the Standards. More than 1,600 firms worldwide have notified CFA Institute of their claim of compliance, including part or all of 23 of the 25 largest asset management firms and 74 of the 100 largest asset management firms, representing more than 60% of global assets under management.

Despite this success, the mission of the GIPS standards is for all asset managers to comply. To achieve this goal, the Standards should be as simple as possible to remove complexity and perceived barriers to compliance and ensure relevance to all asset classes and types of asset managers.

Why Change the Standards?

Although composites are the foundation of the GIPS standards, composites are not appropriate for all investment products. In particular, pooled funds do not fit neatly into the current composite-oriented framework. To achieve broader adoption of the Standards, the evolution will address product-oriented firms and calculation differences (internal rate of return versus time-weighted rate of return).

The GIPS 20:20 vision is structured around the relationship between the asset manager and the client:

  • One-to-One: Strategy focused (the current, traditional focus of the GIPS standards: separate accounts, composites, customized, client specific, client input)
  • One-to-Many: Product focused (pooled funds, standardized, client agnostic, financial statements, no client input)
  • One-to-None: Proprietary (asset owner, proprietary assets, no clients)

As Carl reminded the audience, the core of the GIPS standards is comparability — a global passport for all asset managers across all assets types. The challenge will be to maintain the cohesiveness and integrity of the GIPS standards and accommodate all asset classes (rather than segmenting them) and address client relationships. Stay tuned for updates on the vision and evolution of the GIPS standards.

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Photo credit: © Keating

About the Author(s)
Cindy Kent

Cindy Kent was a director of investment performance standards at CFA Institute. She was responsible for developing, promulgating, and maintaining the GIPS standards. Kent's primary roles included managing the global adoption of and alignment of country-specific investment performance standards with the GIPS standards, developing educational and training products to promote the GIPS standards, and serving as staff liaison to the various committees addressing specific issues of the GIPS standards.

1 thought on “The Evolution of the GIPS Standards: Introducing GIPS 20/20”

  1. Ivy says:

    Thanks for update Cindy. Looking forward to the overhaul. One other area that probably needs to be looked at during this process, is how to present compliant presentation to an ‘existing client’. GIPS focuses on the prospective client.

    Instead of just sending compliant presentation for strategy ‘existing client’s’ portfolio is included in (which is recommended and hence not mandatory), it will be good to incorporate existing client’s portfolio performance within the applicable composite compliant presentation. This will encourage firms to consistently apply same measurement methods and standardize such presentation to improve consistency. This does not however preclude the firm from sending other documents, such as account statements, etc during the reporting period.

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