Performance Perspectives Blog

Six best practices to ensure proper distribution and tracking of GIPS® reports

by | Apr 17, 2023

The Global Investment Performance Standards (GIPS®) are a set of guidelines created to help firms calculate and report investment performance to their clients. Compliance with the GIPS standards is voluntary but is considered a best practice for firms looking to differentiate themselves and provide transparency to their clients.

One important aspect of GIPS compliance is the distribution of GIPS reports to prospective clients and/or prospective investors in a Limited Distribution Pooled Fund (“prospects”).

As verifiers, some of the most common deficiencies we see relate to the requirements around the distribution of GIPS reports.

Top Common Mistakes We See Firms Make:

• Not consistently providing GIPS reports to prospects,
• Not providing GIPS reports in a timely manner when an interested party becomes a prospect,
• Not tracking distribution, either consistently or at all,
• Not providing GIPS reports to existing clients for new strategies, and/or
• Struggling with their policies and procedures when they work with intermediaries, which need to be treated as prospects.

Firms that fail to distribute their GIPS reports are not compliant with the Standards. Additionally, potential clients may perceive this failure as a lack of transparency or compliance control issue, which can lead to a loss of credibility and trust, and ultimately, a loss of business. Finally, a firm may also face regulatory repercussions if deficiencies related to the distribution and tracking of GIPS reports are noted during a review, such as an SEC examination.

Six Best Practices To Ensure Proper Distribution and Tracking of Their GIPS Reports Include:

1. Develop and implement a clear policy for GIPS report distribution: the first step for firms is to develop and implement a policy for the distribution of GIPS reports. The policy should clearly define what a prospective client and/or prospective investor is and how the firm ensures a prospect receives a GIPS report (e.g., the materials and channels used for distribution).
2. Track distribution of GIPS reports: to ensure that GIPS reports are being properly distributed, firms should establish a system to track distribution. Firms can use a variety of methods, such as a simple spreadsheet or a more advanced client relationship management (CRM) system. This helps ensure that no prospects are missed and provides an audit trail for compliance purposes.
3. Leverage technology: technology can be used to streamline the production, distribution, and tracking of GIPS reports.
4. Include the GIPS report in marketing materials: Firms can include their GIPS report in marketing materials such as pitch books and brochures. This ensures that prospects have access to the report when they are considering investing with the firm. If the firm decides to include a GIPS report in marketing materials, ensure there’s an indication or disclosure where the GIPS report can be located, e.g., included in the table of contents.
5. Make the GIPS report readily available on your website: A firm’s website can be used for distributing its GIPS report. The report should be easily accessible and downloadable from the firm’s website using a direct link to the GIPS report(s) provided by the firm. A general link to firm information, such as a link to the firm’s website, will not suffice.
6. Distribute GIPS reports upon request: Firms must make their GIPS reports available upon request to any prospect. It is important to respond promptly to requests and ensure that clients receive the report in a timely manner.



Why is Compliance With the GIPS Standards So Important?

Compliance with the GIPS standards is an important best practice for investment firms. Compliant firms that follow the GIPS standards have a responsibility to accurately and transparently present their investment performance to prospects. Distributing a GIPS report to prospects is an important aspect of this responsibility, and firms should use best practices to ensure GIPS reports are distributed and tracked accurately. By following these best practices, firms can demonstrate a commitment to transparency, accuracy, and compliance with the GIPS standards.

GIPS® is a registered trademark owned by CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein.

-The TSG Verification Team

GIPS Compliance Proposal by TSG Performance

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