GIPS
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GIPS (Global Investment Performance Standards) is set of standards for the presentation of investment performance information, established by the CFA Institute in 1999 with the aim of creating ethical, global and industry-wide methods of communicating investment results to prospective clients.
A key concept of GIPS is that performance should be presented for composites that must include all fee-paying discretionary accounts managed by a firm or money manager for a given investment strategy or objective. This is to avoid selection bias: only including accounts with good returns.[1]
GIPS standards represent ethical principles that establish a practitioner-driven, industry-wide approach to follow in calculating and reporting historical investment results for presentation to prospective clients. The GIPS standards arose from the absence of meaningful comparison among reported investment results, even by ethical firms. Several performance measurement practices made comparability difficult, while other practices cast doubt on the credibility of performance reporting in the industry:
- Account Selection
- Surviviorship Bias
- Varying measurement periods
