Tag Archives: Marketing with GIPS

2017 GIPS Compliance Form Now Available

This feature contains important information about the GIPS® firm notification requirement. Specifically, we will cover:

  1. Important information on what is required and not required with respect to completing the form;
  2. New information concerning some of the form’s optional information;
  3. New information regarding firms that have previously submitted a claim of compliance;
  4. A change in procedure regarding submitting corrections to CFA Institute; and
  5. A look at what is anticipated in the future regarding this requirement.

Continue reading 2017 GIPS Compliance Form Now Available

Top 5 Issues in Annual Disclosure Presentations

By Alexander Cook, CIPM

During the course of a verification, we as verifiers review the firm’s GIPS® compliant disclosure presentations. For new and experienced firms alike there are usually a few things that are brought up and discussed. The following are examples of the most common areas firms question or have problems with during a verification.

#1 Claim of Compliance

One of the most common issues we see amongst advisors who are new to GIPS is the claim of compliance. For firms that have been verified, GIPS requires one of two claims of compliance be used in every GIPS compliant disclosure presentation. Which claim of compliance is appropriate to the given disclosure presentation depends on whether or not the composite receives a performance exam.Oftentimes advisors who are new to GIPS will add content to the language of the claim of compliance. For example, an advisor might think that “XYZ Investments is a registered investment advisor that claims compliance with the Global Investment Performance Standards” fulfills the requirement to disclose the firm’s definition as well as the requirement for the claim of compliance. However, the claim of compliance must contain the exact wording of the claim of compliance set forth in the GIPS standards. In this scenario, we as verifiers would need to receive a revised disclosure presentation with the correct claim of compliance prior to issuing an opinion.

#2 Model Returns

Many advisors who are new to GIPS have questions about model returns. While GIPS does permit model performance to be shown as information that is supplemental to the compliant presentation, linking model returns to actual returns is not allowed.The underlying principles of the GIPS standards are fair representation and full disclosure. With that being said, linking model returns to actual returns is not allowed as it is considered misleading and unrepresentative of the composite’s performance.

#3 Fee Schedule

GIPS requires that the fee schedule be disclosed for the compliant presentation. Oftentimes fees can vary between individual accounts within the composite. It is important to remember that the fee schedule must reflect the firm’s investment management fees that are applicable to prospective clients for the particular composite. For example, if the fee schedule is 1% on the first $1 million, 0.75% on the next $4 million, and 0.50% on everything over $5 million, a disclosure which reads “the fee schedule for ABC composite varies from 0.50% to 1%” is not acceptable. It is important to note that referencing another document that includes the fee schedule does not satisfy this requirement.

#4 Inception Date vs. Creation Date

GIPS requires the composite’s creation date be disclosed.  The composite’s creation date is the date that the firm decided to group the accounts together into a composite. This is not the same as the composite’s inception date – which is the initial date of the composite’s performance record. It is possible for the composite’s inception date and creation date to be the same, but in general they are different.

It is common for advisors who are new to GIPS to confuse creation date for inception date and incorrectly disclose the composite’s inception date. There is nothing wrong with disclosing the inception date, but for GIPS purposes it’s important to remember that it is mandatory to disclose the creation date.

#5 Changes to the Benchmark

During the history of a composite it may become necessary for the firm to change the benchmark that the composite is being measured against. Whatever the reason for the change, it is important to remember that the benchmark should never be changed primarily to make historical performance look better by lowering the benchmark return. The firm must disclose the date of, description of, and the reason for the benchmark change. In addition, firms are encouraged to continue to present the old benchmark.

Continue reading Top 5 Issues in Annual Disclosure Presentations

GIPS® Firm Notification

This feature contains important information about the GIPS® firm notification requirement.  Specifically, we will cover:

  1. Important information on what is required and not required with respect to completing the form;
  2. New information concerning some of the optional form information;
  3. A change in procedure regarding submitting corrections to CFA Institute; and
  4. A look at what is anticipated in the future regarding this requirement.

Firm specific information will be kept confidential; summary information or statistics from the database may be released publically. The information gathered will help stakeholders better understand trends that indicate where growth in the adoption of the GIPS standards is taking place. Continue reading GIPS® Firm Notification

Houston Educational Conference – Coming Soon!

ASHLAND PARTNERS EDUCATIONAL CONFERENCE – MARCH 31 & APRIL 1

Register

FUNDAMENTALS OF PERFORMANCE MEASUREMENT & ATTRIBUTION WORKSHOP

Join Ashland Partners and Carl Bacon, CIPM, renowned performance measurement specialist and one of the founding members of GIPS, for an interactive course on critical concepts of performance measurement and attribution. Topics range from basic return calculation, benchmarks, risk-adjusted performance measurement, and attribution techniques to the Global Investment Performance Standards.

For more information, click here.

Ashland Educational Conference – Boston, October 15 – 17

FUNDAMENTALS OF PERFORMANCE
MEASUREMENT & ATTRIBUTION

 with Carl Bacon, CIPM
and joined by a senior level Ashland Partners professional with GIPS experience, verification, performance mea­surement, and internal control procedure development.

Fundamental Course – October 15 & 16

Join us for this two-day practical course designed to give a thorough understanding of the fundamentals of performance measurement, ranging from basic return calculation, benchmarks, risk-adjusted perfor­mance measurement, and attribution techniques to the Global Investment Performance Standards.

Through class lectures, interactive discussion, practical exercises and team presentations, you will:

    • Understand the critical concepts of performance measurement
    • Learn the different ways to derive returns (and why the results can vary)
    • Get a better understanding of why and how cash flows affect the returns
    • Become familiar with the fundamentals of benchmarking
    • Assert why risk measurement and control are important and what the measures mean
    • Gain insight into the role of attribution, the challenges in getting it right, and how it should be used
    • Understand what’s required to obtain and maintain compliance with the Global Investment Performance Standards

Advanced Attribution Course – October 17

In addition to the two-day course, a one-day intensive advanced course will be offered for those who wish to increase their technical knowledge and gain a detailed understanding of all aspects of performance return attribution.

The one-day advanced attribution course will include the following topics:

  • Introduction to Advanced Attribution
  • Multi-Currency Attribution
  • Fixed Income Attribution
  • Attribution for Derivatives

Registration

 Registration for two day course – Ashland Partners Clients: $1,595 (non-clients $1,795)

Registration for one day advanced course – Ashland Partners Clients: $800 (non-clients $895)

Registration for three day course – Ashland Partners Clients: $2,395 (non-clients $2,695)

Boston
October 15-17
Register Now
We offer CPE Credits!

Marketing Internationally with GIPS

Marketing Internationally with GIPS

by Rosellen Bounds, CIPM and Sachta Bakshi

Methodologies for calculating performance vary all over the world.  So how can investors compare “apples to apples” in this globalized world?  How do investors diversify their portfolio geographically and shop for the best investment managers to meet their needs globally?  In turn, how do investment managers located on different continents compete?  This is where the Global Investment Performance Standards (GIPS®) steps in to bridge the gap.  The GIPS standards allow the investment industry to compare performance on a level playing field, internationally.  When a firm complies with GIPS, they are making a pledge to investors to provide transparency– abiding by the principles of full disclosure and fair representation.  The GIPS standards are advantageous to both the firm complying with the standards as well as investors looking to efficiently allocate their resources into meaningful investments.  Investors in general place higher reliance on GIPS compliant firms than ones that are not.  The investor is assured that the performance presented has met a certain standard and can rely on it to better interpret the results.

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