Global Investment Performance Standards (GIPS) are a set of standardized ethical principles for measuring and reporting the performance of investment firms. These standards were developed by the CFA Institute, a global professional association for investment professionals, and are designed to provide a consistent and transparent method for reporting investment performance.

The GIPS standards are used by investment firms to ensure that their performance is measured and reported in a consistent and transparent manner, which helps to build trust and confidence with clients and stakeholders. One of the key reasons behind the development of GIPS is that comparability in performance of two different asset management firms could be hard to compare in the past. Some of the managers included the fees, others not, and the same could be said about other calculation specific approach to performance including methodology around large cashflows, trading fees, use of leverage, etc. The standards cover a wide range of topics, including portfolio construction, risk management, and performance measurement, and are applicable to a variety of investment products and strategies.

The GIPS standards are widely recognized and used in the investment industry, and firms that claim compliance with GIPS are required to undergo an annual verification process to ensure that they are following the standards. Adhering to the GIPS standards can help firms to demonstrate their commitment to ethical and professional practices, and can also be beneficial in attracting and retaining clients.

Please note, none of the information on this blog represents the opinion of my employer and all information does not represent a financial advice.