Performance Perspectives Blog

Is the SEC Silently Cheerleading for the GIPS Standards?

by | Oct 10, 2023

Is the SEC silently cheerleading the GIPS Standards? by TSG PerformanceThirty-Plus years ago, when the Association for Investment Management & Research (AIMR) launched its Performance Presentation Standards (AIMR-PPS®), the United States Securities & Exchange Commission (SEC) showed support, but never formally endorsed it. Now we’re wondering if the SEC is silently cheerleading for the GIPS Standards. 

And nearly 25 years ago, when CFA Institute [what AIMR has become] launched its Global Investment Performance Standards (GIPS®), the SEC again seemed to support the idea, but didn’t formally endorse it.

With its introduction of the Marketing Rule [which went into effect almost a year ago (November 4, 2022)] and recent introduction of its Private Funds Reform Rule, it seems the SEC has become GIPS’s major promoter, at least in the United States; perhaps even a cheerleader for the GIPS Standards.

The Marketing Rule essentially endorses the use of composites, as opposed to past practice [by many investment advisors] of representative portfolios, model portfolios, back-testing, etc. While the SEC does not actually state “follow GIPS, and you’ll be okay with the rule,” it seems to come pretty close. Granted, there are some differences [e.g., the GIPS standards’ 2020 version made a huge “180” in allowing compliant firms to allocate cash for carve-outs, which was permitted prior to the 2010 version, while the SEC has put huge constraints on their use, since they fall under the “hypothetical performance” rules], we will, no doubt, find many advisors, who previously didn’t comply, realizing that the gap has suddenly narrowed wit the new Marketing Rule.

The Private Fund Rule mentions GIPS approximately 60 times, and some advisors are realizing compliance with GIPS will pretty much satisfy this new rule.

Whether the folks in Charlottesville will formally acknowledge the SEC’s role as a GIPS Cheerleader is yet to be known, but perhaps someone should. Well, other than TSG, of course.

We will, I’m sure, see more public market and private market managers realizing that the gap has narrowed, and that compliance is achievable. Compliance also offers a host of benefits.

To learn how TSG can help you understand more about what’s involved with compliance and/or to move forward to compliance, please contact Christopher Spaulding ( or TSG Performance

p.s., The cheerleader pictured is Sonia Spaulding, Chris’s daughter and David’s granddaughter. 

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