Lesson 1 of 4 · 11 min
Why the GIPS standards exist and who benefits
The GIPS standards give every investment firm one common, ethical way to calculate and present past performance, so that track records are fair, complete and comparable.
In short
- Before GIPS, firms could flatter their record with representative accounts, survivorship bias and varying time periods.
- GIPS is a voluntary, practitioner-driven set of ethical principles built on fair representation and full disclosure.
- Objectives: protect investors and their confidence, accurate and consistent data, one worldwide standard, fair global competition, and global self-regulation.
- Beneficiaries: firms (credibility, access to competitive bids, stronger internal controls), prospective clients and investors (trust and comparability) and asset owners and their oversight bodies.
- Compliance raises credibility but does not replace the client's own due diligence.
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