A rule to ignore …

I recently heard the suggestion that if a GIPS® compliant firm’s P&P (Policies & Procedures) are less than 10 pages, then they’re too short. Obviously spoken by someone who likes to ramble or who avoids pithiness, crispness, succinctness in their writing (and perhaps their speech).

Okay, so I, a former politician, am known to ramble at times. But in my writing, I attempt to be concise as possible, culling out, jettisoning that which is unnecessary.

But how long should a P&P be?

I’ll answer this in the same way one might answer the question, “How long should a doctoral dissertation be?”

The answer: as long as necessary (mine, for example, exceeds 150 pages).

But seriously, isn’t there any guidance on length?

Nope!

We expect to see certain items included, such as:

• the definition of the firm
• what constitutes a non-discretionary* account
• what the timing rules are for
  • adding accounts
  • removing accounts to/from composites, as well as
  • changing accounts from one composite to another
• the firm’s rules on error correction
• how you calculate portfolio and composite returns
• how you calculate dispersion and standard deviation

With the recent introduction of the new SEC Marketing Rule, we are now expecting to see some language included in terms of how the firm is complying, to include how frequently they will update their 1-, 5-, 10-year returns table.

Our P&P contest winners might help!

As you may have heard, TSG conducted its second GIPS P&P contest last year, and we had three winners (in alphabetical order):

• California State Teachers’ Retirement System (CalSTRS)
• LightPoint Portfolio Solutions
• Opus Investment Management, Inc.

The Fall 2022 issue of The Journal of Performance Measurement® contains the one from LightPoint; the other two will be published in coming issues.

If you’re looking for guidance, these are a great place to start.

Why < or > 10 pages?

Firms and asset owners differ quite a bit, as you might expect. Some have just one or two composites, while others have hundreds; some are quite “vanilla,” in terms of their investing, while others can be quite complex. Some include the option of having significant cash flows, while others don’t. Some have been compliant for a long time, and have changed performance systems, which has resulted in changes in the calculations, while others have always done it the same way.

I.e., there are lots of things that contribute to longer or shorter P&P.

To me, it’s silly to think that such a guideline has any merit.

As Elon Musk would likely advise, ignore such a rule; or, as Stevie Van Zandt, would say, fuhgeddaboudit. ¹

MIMiPM™

I thought it might be “fun” to touch on a series that began a few years ago: our Most Interesting Man in Performance Measurement™.

My late wife, Betty, and I were at a hotel in Arizona; I was testifying as an “expert witness” in a fraud case, and we happened to be sitting in the restaurant’s lounge area. She took a photo, and it struck me how it might work in a manner similar to the Dos Equis’ most interesting man.

And so, I decided to create the MIMiPM.

The intent, in all cases, is to be humorous, and as much as possible, self-deprecating. While not always about performance measurement, I strive for this to be part of it, when it fits (or, at times, even when it doesn’t).

A risk of posting something like this is someone might think this is who I am, 100% of the time, which, of course, it isn’t. While I strive to interject humor when possible, I am more often pretty serious, as ours is a pretty serious industry. But that doesn’t mean we can’t have a bit of fun from time-to-time.

Coming up with the ideas for the post is, at times, a challenge, and is perhaps why it isn’t a “regular” series, but instead, somewhat sporadic.

My late wife took the first few photos that we’ve used, and the more recent ones have been taken by my fiancé, who is a big fan of the series. We always strive for something that is “Dos Equis-like.” That is, having some wine or beer (and perhaps a cigar for a future photo, though I don’t smoke).²

If you have ideas for posts, please share them (and, with your permission, I’ll credit you!).

Endnotes

1. As for “Little Steven,” I am listening to his autobiography, Unrequited Infatuations on Audible. He does the narration, and it’s excellent. While I’m not an E Street Band fan, I am a fan of his; perhaps because we’re the same age, and I admire much of what he’s accomplished.

2. As my friend, Dr. Bernd Fischer has pointed out, occasionally the glass is plastic.

TSG’S 2023
INVESTMENT PERFORMANCE MEASUREMENT
CALENDAR OF EVENTS

◼ Asset Owner Roundtable 

  April 26, 2023 • Phoenix, AZ

◼ Performance Measurement Forum

  April 27-28, 2023 • Phoenix, AZ

◼ GIPS Workshop

  May 23, 2023 • New Brunswick, NJ

◼ Launch of Women in Performance

      May 23, 2023 • New Brunswick, NJ

◼ PMAR North America 

  May 23-24, 2023 • New Brunswick, NJ

◼ Performance Measurement Forum 

  June 22-23, 2023 • Edinburgh, Scotland

◼ Performance Measurement Forum 

  November 9-10, 2023 • Porto, Portugal

◼ Asset Owner Roundtable 

  November 29, 2023 • Orlando, FL

◼ Performance Measurement Forum 

  November 30 – December 1, 2023 • Orlando, FL

For additional information on any of our 2023 events, please contact Patrick Fowler

PMAR Co-Sponsors

About TSG Performance

Since 1990, TSG, an employee-owned business, has had an increasing presence in the money management industry.

TSG is the fastest-growing verification firm, serving clients around the globe, with assets ranging from less than $100 million to more than $1 trillion. We provide an array of other performance measurement services and products, including consulting, publishing (The Journal of Performance Measurement®), research, and training. We also host the Performance Measurement Forum, the Asset Owners’ Round Table, and the Annual PMAR™ Conferences.

We are actively involved as members of the CFA Institute and other industry groups. The Spaulding Group has also led the charge for the industry in the handling of error correction, attribution guidelines/ standards, and Investment Performance Measurement Analyst Certification (since handed over to the CFA Institute and now called the CIPM
program).

Several of our senior staff regularly speak at and/or chairs industry conferences. Our founder and CEO, David Spaulding, is a frequent author and source of information to various industry publications. Our firm continues to make huge contributions to our industry, in terms of valuable content, innovative ideas, and volunteer activities.

Our clients appreciate our industry focus and understanding of their business, their needs, and the opportunities to make them more efficient and competitive.

The Journal of
Performance Measurement^®

CURRENT ARTICLES

Highlights from the 2022 GIPS Conference

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Evaluating Benchmark Misfit Risk

• Stephen Campisi

The Journal Interview

• Todd Jankowski, CFA, CFP

TAMPS, Third Party Platforms, and Model Marketplaces

• Noreen Beaman

Measuring Target Date Fund Performance

• Ron Surz

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