Q1 2021 GIPS Compliance Mandate Update
As the leading global provider of GRC solutions to the investment industry, it is our duty to monitor and understand the latest trends and provide informative feedback. With that in mind, this is the first in a series of quarterly updates whereby we provide a snapshot of institutional mandates and how those mandates ask about the calculation and presentation of performance. This information provides good insight into the demand for compliance with the Global Investment Performance Standards (GIPS®) and how that demand evolves over time.
In total, we identified 12 mandates issued in Q1 2021 where GIPS compliance was either asked about, recommended, or required. Below is a selection of those mandates:
| Issuer | Date | Mandate | Mandate Size (USD) | Reference(s) to Performance |
|---|---|---|---|---|
| Ohio Pubic Employees Retirement System | March 10, 2021 | U.S. Equity Small Capitalization | $100-$200M | “Date should be for a composite,” “Simulated Results will not be considered and should not be submitted,” “Submitted returns should be calculated in accordance with GIPS standards,” “Has the composite been verified for compliance with GIPS standards?” “Is there a period for which composite is not in compliance?” |
| City of Los Angeles Department of Water and Power | March 3, 2021 | Active Extended Global Credit | $880M | “The firm must have a five-year track record (i.e., not simulated or back tested), Global Investment Performance Standards (GIPS) compliance performance history for the period ending 12/31/2020,” “At what level of GIPS compliance are the performance numbers reported? Include all performance-related disclosures regarding composites. GIPS composite reporting formats are encouraged.” |
| Taiwanese Labor Organization | February 2021 | Credit | Unknown | “The evaluation and expression of the proposed product investment performance shall be in line with the requirements of Global Investment Performance Standards (GIPS as provided by CFA Institute or the standards of other countries), provided that the applicant shall submit a certificate of equivalence of GIPS requirements at the time of application. If the applicant provides with composite performance, each component performance should be GIPS-compliant, or compliant of the standards of other countries. The composite performance does not necessarily be GIPS-compliant, or compliant of the standards of other countries but its construction should be explained in detail. If the standards of other countries are adopted, apart from the original performance track record, please provide the performance data calculated based on GIPS standard. The certificate of equivalence of GIPS requirements shall be issued by local monetary authority, asset management association, accounting firms or GIPS verifiers.” |
| Plymouth County Retirement System | February 1, 2021 | Small Cap Growth | $90M | “As of December 31, 2020, the strategy must have at least a 5-year GIPS compliant, and third party verified, performance record.” |
As illustrated above, we continue to see GIPS compliance as a common requirement from institutional investors. The breadth of asset classes and investment services that are reflected through the recent mandates include equities, fixed income, credit, and OCIO services. In addition to traditional institutions that have historically demanded GIPS compliance from their underlying managers, we are also seeing institutions that have taken a more agnostic approach now issue RFPs that include GIPS compliance requirements. This may be due to the overall increase of investment consultants involved in the research process which can result in consultant questionnaires used for RFP submission.
How we help
We have helped many firms in their efforts to claim compliance with the GIPS standards. For more information or questions, please reach out to your ACA consultant or contact us below.
About the author
Jamie Stewart, CIPM is a Director with our performance services division. Jamie has worked in the investment performance industry since 2012 and specializes in working with advisors to understand ACA’s service offerings and how they align with their goals. Jamie earned a Bachelor of Science degree in Business Administration with a minor in Marketing and MBA from Southern Oregon University. He also earned his CIPM in in 2017. Jamie is based in Portland, OR.
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