A just-released survey of institutional asset managers, consultants and investors shows that compliance with the Global Investment Performance Standards (GIPS®) remains a powerful force in asset manager selection. According to the survey, conducted by investment analytics firm eVestment and GIPS verification and consulting firm ACA Performance Services:
- 2 out of 3 consultants/investors exclude managers from searches some or all of the time if they do not claim compliance with the GIPS standards;
- 74% of asset management firms claim compliance with the GIPS standards;
- 82% of firms claiming compliance receive a verification;
- 64% of consultants/investors believe pension funds, foundations, endowments and other asset owners will claim compliance with the GIPS standards when new GIPS guidance is released for these entities; and
- 76% of managers believe that consultants/investors will require hedge fund managers to comply with the GIPS standards.
Among those claiming compliance with the GIPS standards, marketing to institutional investors was the top reason for doing so at 82%. Recognition of the GIPS standards as an industry best practice came in second, at 80% (participants could choose more than one reason).
Among asset managers not claiming compliance, cost and time were noted as the No. 1 and No. 2 reasons for not doing so, at 43% and 39% respectively. The survey also found that smaller managers comply with the GIPS standards less frequently than larger managers. For instance, only 69% of asset managers with assets under management (AUM) of less than $500 million claimed compliance, while 88% of managers with AUM over $20 billion claimed compliance.
“The trends on compliance have remained relatively consistent for the three surveys we’ve conducted since 2010,” said Justin Guthrie, Partner at ACA Performance Services. To view the 2012 survey, please click here. “An interesting trend is seeing that a majority of investment managers believe hedge fund managers will be required to comply with the GIPS standards as more institutional investors look to fill alternative mandates that meet their investment criteria.”
“As consultants and investors take advantage of online tools more and more to narrow their manager searches, complying with the GIPS standards is one more way managers can make sure they are not being missed in database searches,” said eVestment Co-founder Heath Wilson. “If GIPS compliance can ensure inclusion in more searches, the time and effort in attaining compliance can be well justified.”
To download a full copy of the survey results, please click here.
eVestment provides a flexible suite of easy-to-use, cloud-based solutions to help the institutional investing community identify and capitalize on global investment trends, better select and monitor investment managers and more successfully enable asset managers to market their funds worldwide. With the largest, most comprehensive global database of traditional and alternative strategies, delivered through leading-edge technology and backed by fantastic client service, eVestment helps its clients be more strategic, efficient and informed.
About ACA Performance Services
ACA Performance Services, a division of ACA Compliance Group, offers GIPS verification and related services to investment managers across the globe. ACA Performance Services was formed in 2013 with the combination of ACA Beacon Verification Services and Vincent Performance Services. Globally, ACA Performance Services is the largest team of professionals solely dedicated to GIPS verification and related services.