The first thing you may be wondering is what “IAW” stands for; and no, it’s not an abbreviation that is being used by twitters or text messagers (at least not that I’m aware of). The military loves abbreviations and acronyms (oh, and they’re not always the same thing), and long ago when I was in the army I frequently used IAW to mean “in accordance with.” I’m not trying to encourage its use … just decided to slap it in here for a change.
Okay, now to the topic. The GIPS(R) standards (Global Investment Performance Standards) prohibit firms from stating that their returns are calculated according to GIPS, except when reporting to clients. But what if you’re asked “are your returns calculated in accordance with the GIPS standards?” Must you say “sorry, but under penalty of law (or the nearest thing) I refuse to answer! Nah. Of course you can answer. But you shouldn’t be stating this in your own materials.
What about software vendors? Nothing has been issued regarding this group, but I think they should be considered a “special case.” They’re selling software to help firms comply with the standards. And consequently, it’s imperative that they be able to state what aspects of their software conform to the standards. And so if a vendor has a statement such as “our returns comply with GIPS,” in my opinion, it’s okay. What isn’t okay is for the vendor to state that their software is “GIPS compliant.” Only asset managers can comply; software is a tool to help them comply!
p.s., What did I mean that acronyms and abbreviations aren’t always the same? Acronyms are abbreviations that can be spoken as a word, for example GIPS, RADAR, and NASCAR. Since not all abbreviations can (e.g., IAW, COB, NLT), not all are acronyms!
p.p.s., I just used two other abbreviations we, in the military, used: COB and NLT. It wasn’t unusual to end a memo, for example, by saying “Your response is due NLT COB Friday.”: meaning “no later than” “close of business.” Just a bit of useless trivia as we end the week!