GIPS 20/20 Consultation Paper

May 8, 2017

At the 20th Annual GIPS Standards Conference, back in October 2016, Carl Bacon, chair of the GIPS Executive Committee, and Jonathan Boersma, Executive Director, GIPS, at CFA Institute, provided some insight into the next edition of the GIPS standards, currently being referred to as GIPS 20/20. 

There are several reasons why the GIPS standards need to change.  Currently composites are the foundation of the GIPS standards, but composites are not appropriate for all investment products. Pooled funds also do not fit well in in the current composite-oriented framework.  The next edition of the GIPS standards will be product driven rather than composite driven. This will allow firms that are product versus composite focused to apply the GIPS standards to the types of products they are managing versus trying to sift through the current GIPS standards to determine what is applicable for a particular product or fund.  Conceptually, GIPS 20/20 will have 3 “pillars” of guidance;

  • One to one – composite performance is appropriate.
  • One to many – fund performance is appropriate.
  • One to none – for asset owners that have no prospective clients. 

Each “pillar” will have its own set of comprehensive guidance.

Other goals for GIPS 20/20 include making the GIPS standards as simple as possible, removing unnecessary complexity and perceived barriers to compliance, and ensuring they are relevant for all asset classes and all types of managers.  GIPS 20/20 will also be streamlined to incorporate required and recommendations found in guidance statements into the provisions of the GIPS standards.

The GIPS 20/20 Consultation Paper is out for public comment from 5/17/17-7/16/17 and can be found here. Comments can be sent to (standards@cfainstitute.org) and the Exposure Draft is expected to be published in early 2018 for a 90-day comment period.