Performance Perspectives Blog

Is GIPS just for the institutional market?

by | Sep 29, 2010

I learned that some folks feel that there’s a perception in the industry that GIPS(R) (Global Investment Performance Standards) only applies to institutional managers, and that retail need not apply. I found this somewhat fascinating, bewildering, surprising, and clearly erroneous.

In the early-to-mid 1990s, a firm that marketed to institutional clients had an ADVANTAGE by claiming compliance with the standards (the AIMR-PPS(R) back then), but today they’re AVOIDING a DISADVANTAGE by complying.

However, in the retail space a manager has an ADVANTAGE by complying because most firms catering to this market don’t. But this isn’t because the standards don’t apply. If your clients are high net worth individuals, clearly most (if not all) will never have heard about GIPS, which is fine. YOU can educate them about the standards. That they’re a set of ethical principles that foster full disclosure of information; that they’re globally recognized; that you invested significant amounts of time and money to comply; that they are viewed as the “best practices” for reporting performance to prospects; that you want to comply because you feel that by complying you’re providing your clients and prospects with the best information to gauge your past performance. I could go on-and-on, but hopefully you get my point.

GIPS isn’t just for institutions any more…the retail market is huge and waiting for managers to hop on the GIPS bandwagon.

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