Opinion ID: 4182911
Heading Depth: 3
Heading Rank: 2

Heading: Global Investment Performance Standards

Text: The Global Investment Performance Standards (“GIPS”) are “universal, voluntary standards to be used by investment managers for quantifying and presenting investment performance that ensure fair representation, full disclosure, and apples-to-apples comparisons.” GIPS has two related components, which are the performance standards and the advertising guidelines. The performance standards establish how a firm should calculate and present its investment performance. As you might have guessed, those firms that comply with the GIPS performance standards may represent themselves as being “GIPS-compliant.” It is generally understood that compliance with GIPS “provides a level of credibility” to the firm’s performance results and gives prospective clients “a greater level of confidence” in the firm’s performance presentations. Under GIPS, if a firm chooses to advertise that it is GIPS compliant, that firm must also comply with the GIPS advertising guidelines.2 The advertising guidelines require any advertisement claiming GIPS compliance to disclose 2 The GIPS rules say: “[S]hould a GIPS-compliant FIRM choose to advertise performance results, the FIRM MUST apply . . . the GIPS Advertising Guidelines in order to include a claim of compliance with the GIPS standards.” 3 Case: 16-15322 Date Filed: 06/30/2017 Page: 4 of 32 specific information about the firm’s investment returns. Specifically, the firm must provide: “(1) period-to-date composite performance results and (2) either one-, three-, and five-year cumulative annualized composite returns or five years of annual composite returns.”