PPT Global Investment Performance Standards GIPS Brief history key concepts and status of GIPS
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PPT Global Investment Performance Standards GIPS Brief history, key concepts and status of GIPS in Asia PowerPoint presentation | free to view
Global Investment Performance Standards GIPS Brief history, key concepts and status of GIPS in Asia
Brief history, key concepts and status of GIPS in Asia Pacific. Promulgate local compliance with GIPS standards. Maintain local integrity of the Standards. PowerPoint PPT presentation
Title: Global Investment Performance Standards GIPS Brief history, key concepts and status of GIPS in Asia
Global Investment Performance Standards (GIPS)
Brief history, key concepts and status of GIPS
Committee Chair, Asia Pacific RIPS, GIPS
Council Presentations in Seoul at AMAK and KSCFA
Conferences
Outline
- GIPS Standards
- brief history
- why have them?
- key GIPS objectives
- key GIPS provisions
- evolutionary approach
- Status of GIPS Adoption Worldwide
- Governance Framework
- framework to date (IPC)
- new framework (GIPS Council and EC)
- increasing importance of Country Sponsors
- Country Sponsors
- list of all Country Sponsors to date
- focus on Asia Pacific Region
1. GIPS Standards
Brief history
- AIMR Code of Ethics and Standards of Professional
Conduct (1962)
develop GIPS
standards
countries involved)
comment
published
further
for public comment
adopt revised GIPS standards
Committee formed
of all Country Sponsors)
Why are standards necessary?
- Perceived questionable practices
- Back testing
- Model portfolios
- Portable performance
- Survivorship bias
- Self selection or representative account/period
(cherry picking)
Perceived questionable practices Solved with GIPS
standards
- Model or back tested results not permitted
- Performance record is owned by the firm
- Terminated accounts history must stay with firm
- Remove account subjectivity (cherry picking)
firm must include all fee paying accounts in
compliant presentations
- Remove time subjectivity must report annual
returns
GIPS objectives
- To obtain worldwide acceptance of standards for
calculating presenting results
investment firms
basis
Key requirements of GIPSFundamentals of
compliance
- GIPS standards must be applied on a firm-wide
basis (0.A.1)
assigned to a sub-advisor in a composite provided
the firm has discretion over the selection of the
sub-advisor (0.A.4)
and procedures used in establishing and
maintaining compliance (0.A.6)
standards (0.A.8)
provide a compliant presentation to all
prospective clients (0.A.11)
description to any prospective client that makes
such a request (0.A.12)
Key requirements of GIPS (contd)Input data
calculation methodology
- All data necessary to support firms compliance
must be captured and maintained (1.A.1)
values (1.A.2)
2001 (1.A.3)
and losses plus income, must be used (2.A.1)
periodic returns must be geometrically linked
(2.A.2)
portfolios must be included in total return
calculations (2.A.4)
weighting the individual portfolio returns at
least quarterly (2.A.6)
Key requirements of GIPS (contd)Composite
construction and maintenance
- COMPOSITE central/key concept of GIPS
- aggregation of individual portfolios representing
a similar investment mandate, objective, or
strategy
must be included in at least one composite
(3.A.1)
timely and consistent basis after the portfolio
comes under management (3.A.3)
history of the composites up to the last full
measurement period under management (3.A.4)
one composite to another unless documented
changes in client guidelines or the redefinition
of the composite make it appropriate (3.A.5)
Key requirements of GIPS (contd)Disclosures
- There are 26 disclosure requirements
- Firms must disclose the definition of Firm used
to determine the total firm assets and firm-wide
compliance (4.A.1)
complete list and description of all of the
firms composites (4.A.2)
of leverage or derivatives (if material),
including a sufficient description of the use,
frequency, and characteristics of the instruments
to identify risks (4.A.5)
or net-of-fees (4.A.6)
(4.A.12)
(4.A.24)
Key requirements of GIPS (contd) Presentations
- The following must be reported for each composite
presented (5.A.1)
composite inception) performance that is GIPS
compliant
the composite
returns for each annual period
their compliant history so long as the Firms meet
the disclosure requirements for noncompliant
performance and only compliant returns are
presented for periods after 1 January 2000
(5.A.2)
interpretation (incl. a glossary)
their interpretation (incl. a glossary)
revised GIPS standards as Sections 6 and 7,
respectively, and are effective from 1 January
2006
Evolutionary approach 3-pronged process used to
date
- 1. Extending the scope of the Standards to
adequately address
hedge funds)
Global endorsementCountries that have already
adopted GIPS principles
TGs GIPS (Austria) GIPS (Denmark) GIPS
(France) GIPS (Hungary) VBA-PPS (Netherlands)
GIPS (Norway) GIPS (Poland) GIPS (Spain)
GIPS (In English) New Zealand Portugal Belgium Lux
embourg Sweden Germany Hong Kong Singapore
CVGs AIPS (Australia) GIPS (Egypt) GIPS
(Ireland) IPPS (Italy) SAAJ-IPS (Japan) SA-IPS
(South Africa) SPPS (Switzerland) UKIPS
(UK) AIMR-PPS (US Canada)
Global convergence One brand GIPS
- Global convergence
- expected to be achieved in 2006
- GIPS will then become a truly global Standard
- 18 countries either have already replaced or are
in the process of replacing their existing CVG
(or TG) with the GIPS standards
replaced by the GIPS standards
necessary (e.g. France) and hopefully new ones
will emerge in other countries (e.g. China, etc)
The Goal
- To have all countries adopt GIPS as the standard
for investment firms to present historical
investment performance
