Compliance with the GIPS® standards is not a one-time exercise that, once completed, can be permanently checked off a firm’s to-do list. Once GIPS® compliance has been achieved, it is essential to maintain compliance on an ongoing basis. There are tasks that must be completed on a monthly and annually basis in order to maintain compliance.
Monthly
Portfolio Performance Calculations
- Compile and calculate portfolio returns
- Review returns for accuracy (test on a sample basis)
- Load portfolio returns into composite management system
Composite Construction
- Compilation/review of composite membership list
- Identify new, terminated and changed accounts and confirm appropriate composite assignment
- Confirm supporting documentation is on file for membership changes
Composite Performance Calculations
- Calculate composite performance
- Review composite returns for accuracy
- Review and investigate performance outliers
- Assess impact of any errors identified
Quarterly
GIPS® governance and oversight meeting
- The Firm should establish a GIPS® Working Group, comprised of representatives from different departments/offices, which meets on an as needed basis to discuss and review items related to GIPS® compliance. Such items would include:
- Assess changes to the GIPS® standards (including new Guidance Statements and other interpretations issued by CFA Institute) and the impact to the Firm
- Changes in investment management style or process
- Composite membership changes
- Benchmark changes
- Composite errors
- Changes in presentation footnotes
- Changes to fee schedules
- Composite creation and maintenance issues
- Changes in laws or regulations regarding the calculation and presentation of performance
Annually
- Compile and confirm that the Firm AUM used for GIPS® purposes is complete
- Review and update list of composite descriptions to ensure accuracy
- Review and update the firm’s GIPS® policies and procedures
- Review and update compliant presentations
- Confirm all annual statistics are accurate (e.g. firm AUM, composite returns, number of accounts, dispersion, 3-year annualized standard deviation)
- Confirm disclosures are accurate and appropriate
- Review and update marketing books for supplemental information and other GIPS®-related disclosures
- Confirm and test the process for distribution of GIPS® compliant presentations
- Provide internal education to various groups that are impacted by GIPS® compliance
- If verified, manage and oversee completion of GIPS® Verification
