What are 'Global Investment Performance Standards (GIPS)'

The Global Investment Performance Standards (GIPS) are ethical standards used by investment managers. They are used in the when creating performance presentations that ensure fair representation and full disclosure of investment performance results. Global Investment Professional Standards were created by the CFA Institute and governed by the GIPS Executive Committee. They are standardized guidelines for reporting the ability of an investment firm to make profits for investors.

Breaking Down 'Global Investment Performance Standards (GIPS)'

GIPS are ethical standards that apply to the way investment performance is presented to potential and existing clients. Before GIPS was adopted investment management firms complied with the Association for Investment Management and Research-Performance Presentation Standards (AIMR-PPS), which were published in 1993. GIPS are more global in their scope than the older AIMR standards.

In response to the need to update the standards the AIMR formed a GIPS committee in 1995. The first edition of GIPS was published in 1999. At this time, the AIMR also established the Investment Performance Council (IPC) to continue building out the standards. In 2005 the CFA Institute approved the new edition of GIPS and started the work of converging the old AIMR-PPS and GIPS to release them on date of Jan. 1, 2006, at which point the AIMR-PPS would cease to exist.

Global Investment Performance Standards: Who Are They For?

Investment management companies often specify that they are GIPS Compliant. It can lend additional credibility to investment management companies that do business outside of the more mature markets of North America and Europe. It is only a standard, however, and not a law; firms can choose not to comply with GIPS. The standard, because it is global in nature, makes it easier to for firms to do business in multiple countries, saving them time by having to apply different performance calculation measurements or investment presentations that include performance data depending on the locale. For more, see a CFA Institute Guidance Statement on GIPS compliance.

Global Investment Performance Standards: Current Standards

The standards are based on "the fundamental principles of full disclosure and fair representation of investment performance results," according to the CFA Institute. The GIPS standards consist of:

  • The Provisions of the GIPS standards, which includes information on compliance fundamentals, input data, calculation methodology, composite construction, disclosure, presentation and reporting, real estate, private equity, and wrap fee/separately managed account (SMA) portfolios. 
  • The GIPS Valuation Principles
  • The GIPS Advertising Guidelines Verification
  • A GIPS Glossary Appendix (A-C) containing sample compliant presentations, advertisements, and list of composite descriptions

This most recent edition of the GIPS was approved in 2010 and became effective on January 1, 2011. In December 2017 the CFA Institute announced that it would launch the GIPS 20/20 project to update the GIPS, which entails collection and consideration of stakeholder input and opinions.

RELATED TERMS
  1. International Accounting Standards ...

    An older set of standards stating how particular types of transactions ...
  2. Underwriting Standards

    Underwriting standards are guidelines established to ensure that ...
  3. Modified Dietz Method

    The Modified Dietz Method calculates a portfolio's return using ...
  4. International Organization for ...

    The International Organization for Standardization or ISO is ...
  5. Standard & Poor's - S&P

    The world's leading index provider and the foremost source of ...
  6. Statement of Financial Accounting ...

    The Statement of Financial Accounting Concepts is issued by the ...
Related Articles
  1. Personal Finance

    What To Expect On The CFA Level III Exam

    The Level III exam is one of the tougher exams for the CFA. Read this to give yourself a little insight.
  2. Investing

    Gauging the impact of combining GAAP and IFRS

    The convergence of accounting standards is changing the attitudes of CPAs and CFOs toward harmonization of international accounting.
  3. Retirement

    The Gatekeepers: Consultants Hold the Key

    Institutional investment consultants help match up asset managers with large institutions.
  4. Investing

    Tech Stocks Are Not Expensive, History Shows

    A study of market history suggests that the current environment is aligned for continued outperformance from tech.
  5. Managing Wealth

    How To Avoid Falling Prey To The Next Madoff Scam

    Due diligence does work, but the loose reporting standards for hedge funds make extra care and attention necessary.
  6. Investing

    3 Moves Pfizer Should Make for Its Shareholders (PFE, JAZZ)

    PFE data by YCharts. Big pharmaceutical giant Pfizer (NYSE: PFE) isn't often thought of as a substantial growth driver of income investors' portfolios, but over the trailing five-year period, ...
  7. Investing

    GAAP And The IFRS Standards Convergence Efforts In 3 Substantial Areas

    Understand the specific steps that have been taken in hopes of converging the GAAP and the IFRS accounting standards, despite the philosophically and culturally based methodological differences ...
  8. Personal Finance

    What to Expect on the CFA Level I Exam

    The Level I exam for the Chartered Financial Analyst designation can be challenging. Here's what to expect.
  9. Investing

    Gold Standard Stock Falls After Issuing Shares (GSV)

    Gold Standard said it will use proceeds from the private placement to make various investments.
  10. Investing

    Not All Advisors Are Working in Your Best Interest

    Just because someone calls themselves a financial advisor does not mean they are working in your best interest.
RELATED FAQS
  1. What is a relative standard error?

    Find out how to distinguish between mean, standard deviation, standard error and relative standard error in statistical survey ... Read Answer >>
  2. Do all countries follow the same GAAP?

    Learn about GAAP and IFRS accounting standards, and understand the difficulties in having a basic set of accounting principles ... Read Answer >>
  3. How is the standard error used in trading?

    Understand how the standard error is used in statistics and what it measures. Learn how the standard error is used in trading ... Read Answer >>
  4. How is standard deviation used to determine risk?

    Understand the basics of calculation and interpretation of standard deviation, and how it is used to measure and determine ... Read Answer >>
Hot Definitions
  1. Working Capital

    Working capital, also known as net working capital is a measure of a company's liquidity and operational efficiency.
  2. Bond

    A bond is a fixed income investment in which an investor loans money to an entity (corporate or governmental) that borrows ...
  3. Compound Annual Growth Rate - CAGR

    The Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer ...
  4. Net Present Value - NPV

    Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows ...
  5. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing a company that measures its current share price relative ...
  6. Internal Rate of Return - IRR

    Internal Rate of Return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments.
Trading Center