Compliance with GIPS in Performance Reporting

Very Hard Global Investment Performance Standards Compliance

As a portfolio manager for a global investment firm, you are tasked with preparing the annual performance report for your firm’s clients. You have recently completed a review of your firm’s compliance with the Global Investment Performance Standards (GIPS). During this review, you encounter specific situations regarding composite presentations and fee disclosures.

According to GIPS, the disclosure of performance fees and their impact on the reported performance should be clearly addressed in the firm’s presentations. Furthermore, any non-compliance issues discovered during your review must be reported appropriately to both existing and prospective clients.

What is the primary requirement regarding compliance with GIPS that you should be aware of when preparing your report?

The performance report must include past performance for a minimum of five years regardless of whether it is compliant with GIPS.

Any non-compliance issues must be corrected before any performance claims are made; otherwise, they should be disclosed to clients.

Clients must be notified only of regulatory compliance issues but not of GIPS non-compliance.

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