Global investment performance standards
Voluntary, industry-wide standards for calculating and presenting investment performance so that firms' records can be fairly compared. Compliance is claimed by a whole firm, not for a single product.
Where you will meet it
Global investment performance standards appears in 7 learning outcomes on the CFA syllabus. A few of them:
- Put the Performance Presentation standard, III(D), into practice
“Compliance with the global investment performance standards satisfies the Standard but is not required by it — the Standard's own requirement is simply that the presentation not mislead.”
- Propose practices and procedures that stop breaches of the ethics Code and the Standards of Professional Conduct before they occur
“For performance, composites that include terminated accounts, clear labels on simulated or prior-firm results and a statement of whether returns are gross or net of fees, with GIPS compliance as best practice.”
- Propose practices and procedures that head off breaches of the Code and Standards under Standard III, Duties to Clients
“Complying with GIPS, and claiming it, gives performance presentation a tested framework, and access controls on client files protect confidentiality.”
- Discuss what the GIPS standards aim to achieve, whom they cover, and how they help investment managers as well as prospective clients and investors
“The GIPS standards are voluntary, ethical principles for calculating and presenting investment performance, built on fair representation and full disclosure.”
Practise it
Practise global investment performance standards until it is automatic: questions that explain every wrong option.
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