2020 GIPS Standards: Prepare for the Changes

The 2020 edition of the Global Investment Performance Standards (“GIPS®”) was released to the public at the end of June 2019 and with it comes a number of changes that firms will need to address. To maintain compliance with the GIPS standards, firms must make the required changes necessary to follow all requirements of the 2020 GIPS standards prior to presenting information through 31 December 2020 in their firm’s GIPS Reports.

All firms and asset owners complying with the GIPS standards will be required to at least make some changes to disclosures and the terminology used in their GIPS policies and procedures. Some firms will require more work. The following questionnaire is designed to help firms determine if converting to the 2020 GIPS standards will require more than a few minor tweaks for their firm. This list does not include all changes, but includes the top ten material changes that may require a project plan to be put in place to be able to implement the required changes by the effective date of the 2020 GIPS standards.

If your firm answers “Yes” to any of the following questions, a project plan should be established to address how the 2020 changes will be implemented at your firm prior to presenting 2020 performance in your firm’s GIPS Reports:

Key Questions to Consider

  1. Does your firm have limited distribution pooled funds (i.e., private funds that are not regulated under a framework that would permit the general public to purchase shares in the fund without a one-on-one presentation)?
  2. Has your firm created single account composites for pooled funds solely for the purpose of meeting the GIPS requirement of having every discretionary, fee-paying portfolio in at least one composite?
  3. Does your firm have multi-strategy portfolios (e.g., balanced portfolios where the equity and fixed income segments each could be represented as standalone strategies) where you would like to carve-out the individual strategies into their own composites?
  4. Does your firm have portfolios where actual transaction costs are unavailable (e.g., wrap accounts or other bundled fee arrangements)?
  5. Does your firm have portfolios where your firm controls the amount and timing of external cash flows (other than for private equity or real estate)?
  6. Does your firm have real estate or private equity composites?
  7. Does your firm include theoretical performance (e.g., model performance) as part of a GIPS report?
  8. Does your firm follow the Advertising Guidelines to claim compliance with the GIPS standards outside of your GIPS reports?
  9. Does your firm currently update your GIPS compliant presentations more than 12 months after the year ends?
  10. Does your firm have advisory-only assets or uncalled committed capital you wish to present in your GIPS Report?

Need Help Navigating or Implementing the 2020 GIPS Standards?

As a consulting firm specialized in investment performance and the GIPS standards, Longs Peak Advisory Services (“Longs Peak”) is available to help implement the 2020 GIPS standards for your firm. Verification firms are required to remain independent, which means they can provide your firm with advice, but they cannot actually “get their hands dirty” making the changes for you.

Whether you answered “Yes” to any of the questions above or if you just need help with the minor tweaks all firms need to make, Longs Peak is available to help. Please reach out to us and we can create a project plan to help your firm prepare to comply with all requirements of the 2020 GIPS standards.

A Personal Note From Our Founder

Today, September 3, 2018, Longs Peak turns 3 years old! Over the last 3 years we have provided investment performance and GIPS consulting services to over 70 investment firms and we are proud that, for many of these firms, we helped them claim compliance with the GIPS standards for the first time.

To celebrate this occasion, instead of writing a technical blog about performance and GIPS, I’d like to share what this date means to me each year.

September 3rd was not an arbitrary date to launch our firm. This date is significant to me because on September 3rd 2003 I had my first open heart surgery to repair an aortic aneurysm and to replace my aortic valve with a valve from a pig. Exactly ten years later, on September 3rd 2013, I had a second open heart surgery to replace my pig valve with a valve from a cow because my pig valve had torn.

Going through these surgeries and the recovery periods that followed was not easy, but I made a conscious decision to embrace being part farm animal and focus on the positive. These experiences motivated me to live my life to its fullest potential. This means something different to everyone, but for me, this meant taking chances to ensure I didn’t look back on my life wishing I’d had the courage to do something I was too scared to try. One of the biggest chances I took was leaving a great job to start Longs Peak. This was one of the scariest decisions I’ve ever made, but it has been one of the most rewarding adventures of my life, thanks to our wonderful clients and amazing team.

Over the years, this mentality has pushed to make decisions that help me truly experience life outside of work as well. Specifically, on or around September 3rd each year, I celebrate my life and health by doing something I would not have been able to do if it weren’t for the success of these surgeries. In previous years I have run a marathon, completed long hikes, and climbed 14ers (mountains in Colorado above 14,000 feet), but this year I am taking it to a new level!

With this year being both the 5th and 15th anniversaries of my two surgeries, I was looking for a big physical challenge as well as a way to encourage the people around me to live long, healthy, and satisfying lives. This year, I have decided to climb Mount Kilimanjaro as a fundraiser for the American Heart Association, which I will do during the second half of this month.

GillyDoesKiliPicture

The American Heart Association’s mission is to be a relentless force for a world of longer, healthier lives. Without the hard work of organizations like this, the idea of putting parts of farm animals into people would sound ridiculous. Actually, it still does sound ridiculous, but it works, and it gives people like me the opportunity to live full and complete lives.

I would love to have your support in this adventure. If you are interested in contributing to the fundraiser, donations of any amount are greatly appreciated and can be made through the link below. Please note that as my contribution to this cause I will personally match all donations up to $2,500.

Link to fundraiser page: Gilly Does Kili