GIPS® for Asset Owners

By Nikola Feliz, CPA, CIPM

The GIPS® Guidance Statement on the Application of the GIPS Standards to Asset Owners was the only guidance statement approved in 2014 and became effective January 1, 2015.  Traditionally, many considered the role of asset owners in GIPS compliance relegated to setting the expectation of compliance for their third party investment managers. However, although asset owners face different challenges in meeting the GIPS standards, they can – and many in fact already do – claim compliance.  As long as an asset owner has discretion over the assets under management, they can claim compliance just like any traditional investment management firm.

So if asset owners were already able to claim compliance, why create a guidance statement? Because of those different challenges asset owners face in meeting the GIPS standards.  For instance, they don’t have prospective clients in the traditional sense (but they do have oversight boards) and they typically have one mandate for a fund with multiple asset classes.  This guidance statement gives them the flexibility to report to their oversight boards in a manner that benefits the organization.  Which, like presentations to prospective clients, is an underlying goal of the GIPS Standards.

While this may not seem like a significant event, guidance statements such as this for asset owners and the Guidance Statement on Alternative Investment Strategies and Structures, show that GIPS is growing and expanding beyond traditional assets and institutional third party investment managers. We also feel this will raise the bar and create more demand for GIPS compliance from third party managers.  If the investor is compliant, why not the manager?

Register for the free Live Webinar: The Application of the GIPS Standards to Asset Owners coming up on February 25, 2015.

One thought on “GIPS® for Asset Owners”

  1. The participants in the plan are the EXISTING CLIENTS.

    0.B.4 FIRMS SHOULD provide to each existing client, on an annual basis, a COMPLIANT PRESENTATION of the COMPOSITE in which the client’s PORTFOLIO is included.

    ASSET OWNERS should be encouraged to provide COMPLIANT PRESENTATIONS to the PLAN PARTICIPANTS (in addition to the oversight boards).

    PLAN PARTICIPANTS deserve fair representation and full disclosure of the investment plan.

    CFAI does not seem to recognize that ASSET OWNERS have a fiduciary duty to act solely in PLAN PARTICIPANTS’ interests.

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