Impact of Gross vs Net Performance Results under GIPS

Medium Global Investment Performance Standards Key Concepts

The Global Investment Performance Standards (GIPS) are a set of ethical standards that provide guidance for investment firms on how to calculate and present their investment performance. Understanding the key concepts of GIPS is crucial for compliance and accurate reporting. One of the core principles is the requirement for performance results to be calculated on a gross or net basis.

Which of the following statements best describes the impact of using gross versus net performance results in accordance with GIPS?

Gross performance results provide a view of investment performance before fees and expenses, while net performance results reflect the actual returns experienced by investors after all fees and expenses have been deducted.

Using gross performance results allows firms to manipulate their performance presentation, making it appear more favorable, while net performance always presents a true and fair view.

Both gross and net performance results are mandatory disclosures for all presentations under GIPS, and firms cannot choose to report only one.

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