OPINION PIECE - by Bianca Richardson, Senior Policy Manager - Investments and Global Markets
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Developed by the CFA Institute, the Global Investment Performance Standards (GIPS) are globally recognised and set industry best practice for investment performance reporting and presentation.
The Standards provide a consistent and transparent framework for reporting. The Financial Services Council is the Australian GIPS country sponsor and to that effect we seek to promote the GIPS Standards and facilitate events for those who are interested in performance standards.
You may be aware that the GIPS Standards were refreshed last year with three new GIPS 2020 Standards for Asset Owners, Firms and Verifiers which commenced 1 January 2020. A number of key changes have been made to the Standards. For example, key changes to the GIPS 2020 Standards for Firms include:
- “Differentiated reporting for composites versus pooled funds
- More focus on the portfolio structure and less on asset classes
- More flexibility for using money-weighted returns versus time-weighted returns
- Ability to present carved-out performance with allocated cash”(1)
The CFA Institute has been busy continuing its work to provide users of GIPS Standards with more information about these respective Standards. There are now eight Explanations of the Provisions available for the GIPS 2020 Standards for Firms including for composite and pooled funds, time-weighted and money-weighted return profiles.
Until guidance for Asset Owners is completed, the CFA Institute has suggested that asset owners may find it helpful to consider the guidance for firms, with many of the concepts being very similar.
If you would like to find out more about the GIPS Standards and Explanations follow this link.
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GIPS 2020 Update with Carl Bacon
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Carl Bacon, a performance measurement specialist, is well known to many FSC members. Based out of the UK, Carl Bacon has been facilitating P Group training courses focusing on risk adjusted performance measurement and portfolio return attribution(2) in Australia for many years.
Prior to COVID-19 disruptions changing the way we work and live, and largely halting all international travel, we were hoping on arranging a live event with Carl Bacon.
We have changed course and are now planning a webinar event instead, with Carl providing a live broadcast from London to share insights on the GIPS 2020 Standards and evolving trends in performance measurement standards. This will be a great event for those with interest in the GIPS 2020 Standards, verifiers, custodians and those interested in performance measurement.
We expect to share more information about this event very soon.
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FSC Performance Analytics Expert Group
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On a separate note, you may not be aware that we have the Performance Analytics Expert Group (PAEG) which meets regularly to discuss concepts, ideas and theories relating to performance measurement and analysis. The PAEG also helps produce working papers for submission to industry associations and regulators as well as undertaking the time-consuming task of reviewing and updating the FSC’s relevant Standards and Guidance Notes related to product performance: calculation of past returns and presentation of past performance information.
If you are an FSC member who is a performance analyst or involved with the GIPS Standards and you would like to join the PAEG, please contact This email address is being protected from spambots. You need JavaScript enabled to view it.. The PAEG is a forum to keep informed on performance issues and changes to the Standards.
Finally, I would like to take this opportunity to thank and acknowledge;
- Stuart Hoy from J.P. Morgan Chase; and
- Stephen Campbell from KPMG.
Stuart and Stephen are the respective Chair and Deputy Chair of the PAEG and help drive the review and updated versions of the FSC Standards and Guidance Notes for the benefit of the rest of FSC members. Thank you for your ongoing contribution to the FSC and the industry.
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