Wednesday: A look forward to GIPS 2020

The CFA Institute’s updated reporting guidelines are due to launch later this month and most firms believe compliance will be a must.

Who’s going to comply with GIPS 2020? That’s the question we hear at closed door CFO events (which reminds me – we have one coming up in Boston on June 25).

The Global Investment Performance Standards were created in the 1990s to ensure performance transparency and comparability. They were adopted widely – just not by private equity firms who “indicated that the structure of the GIPS standards is not a good fit for them,” says Karyn Vincent, head of global industry standards at the CFA Institute.

The updated standards – which are designed to be more applicable to private funds – should come out later this month: read our five-minute briefing on what changes are being made and how firms and consultants are thinking about adoption. Most alternatives firms (67 percent) believe that investors and consultants will eventually require GIPS compliance, according to one survey.

In the world of credit, GIPS is “gaining significant traction” due to investor demand, says a note this week from ACA Compliance Group, which lists seven recent public pension credit management RFPs for which GIPS compliance is must.

From ACA’s note:

“Currently, for most asset managers, the GIPS standards require firms to calculate portfolio performance by using a time-weighted return methodology. However, there is relief allowed for portfolios defined as private equity or real estate equity. Given the nature of these vehicles, the industry standard is to calculate performance using a money-weighted return (Note – TWR as well as MWR required for Real Estate). The upcoming release of the 2020 GIPS Standards in June 2019 should ease the challenges for credit managers somewhat, as firms will be able to determine if TWR or MWR is most appropriate, based on certain prescribed criteria – primarily, whether or not subscriptions and redemptions are controlled by the portfolio manager.”

Elsewhere, if you are thinking about automating your operations and looking for a consultant check out our list of robotic process automation consultants. Want to add something to the list? Contact

Today’s email was prepared by Toby Mitchenall.