Survey Confirms Increase in GIPS Compliance, Verification; Consultant, Investor Demand a Key Driver

A just-released survey of institutional asset managers, consultants and investors confirms compliance with the Global Investment Performance Standards (GIPS^®) is on the rise, with 84% of asset managers responding saying their firms are GIPS compliant. This is up from 72% who claimed compliance in 2014, the last time institutional investment analytics firm eVestment and consulting firm ACA Compliance Group conducted this survey of eVestment users.

This increase is driven by investor and consultant activity, as 75% of investors and consultants responding to the 2018 survey said they exclude managers from searches some or all of the time if they do not claim GIPS compliance. This is up from two out of three investors/consultants who said they excluded managers from searches some or all of the time if they do not claim GIPS compliance in the 2014 survey.

For the first time, eVestment and ACA Compliance Group also asked for insights from private equity, hedge fund and other alternative investment managers, as well as from consultants and investors working with alternatives managers, about their thoughts on GIPS compliance. As a result, the 2018 data related to alternative investments does not have a 2014 benchmark.

“The survey results indicate a potential major shift for alternative managers, with three out of four consultant responses indicating that they expect to start requiring hedge fund and private equity managers to comply with the GIPS standards,” said Justin Guthrie, ACA’s Head of Performance Services. “This is a fundamental change to asset classes that have historically had very low rates of compliance.”

Some top-level findings from the new survey include:

• 94% of asset management firms that claim compliance receive a verification, up from 87% who reported being verified in the 2014 survey.
• Among investors and consultants, 75% said third-party verification is important or very important in their manager search process.
• 94% of consultants/investors believe more pension funds, foundations, endowments and other asset owners will claim GIPS compliance when the 2020 GIPS Standards are released.
• 67% of alternative asset managers believe investors and consultants will ultimately require alternative managers to comply with the GIPS standards.
• Asset manager size appears correlated with claiming GIPS compliance, with 72% of firms with AUM below $500 million claiming compliance, while 81% of firms with AUM over $20 billion claim compliance.

“The institutional investment industry is moving toward more transparency across all asset classes, which is something eVestment has championed since our founding in 2000,” said eVestment Global Head of Strategic Engagement John Molesphini. “The increases across the board in the findings of this new GIPS compliance survey are further evidence of this trend.”

To download a full copy of the survey results, please click here.

About eVestment

eVestment, a Nasdaq company, provides a flexible suite of easy-to-use, cloud-based solutions to help the institutional investing community identify and capitalize on global investment trends, better select and monitor investment managers and more successfully enable asset managers to market their funds worldwide. eVestment’s mission is to help make smart money smarter.

About ACA Performance Services

ACA Compliance Group is a leading provider of risk management and technology solutions that focus on regulatory compliance, performance, financial crime, and cybersecurity. ACA Performance Services, a division of ACA Compliance Group, offers GIPS standards verification and related services to investment managers across the world. Globally, ACA Performance Services is the largest team of professionals solely dedicated to GIPS standards verification and related services.