Although the success of GIPS® is undeniable, the main goal of the standard is for all asset managers to comply.
The GIPS® 20/20 update will include two main focus areas:
- Increasing the global adoption of GIPS®: The first is ongoing and a recent achievement for the CFA Society is the recent addition of Saudi Arabia, which is now a new country sponsor. Of the now 39 countries to adopt GIPS®, this is the first located in the Middle East. This will hopefully trigger more countries to follow suit, along with the countries currently considering the endorsement of GIPS®.
- Improve the standards: The other focus is to do this on a global scale without losing its structure and focusing on the main goal. The GIPS® standards have grown from covering a very specific niche market to being a widely-used tool within the industry. To continue this growth, the GIPS® 20/20 standard is focusing on the relationship between asset managers and asset owners.
WHAT NEEDS TO BE DONE?
Initially, the main target for GIPS® was ‘traditional’ institutional asset managers, where the relationship between the manager and the client was of a one-to-one nature. To increase the global adoption of GIPS® the update needs to include more product-orientated firms and begin including coverage for less ‘traditional’ asset-classes such as Real Estate and Private Equity.
The third situation which has found coverage by GIPS® through the Guidance Statements is where no client-relationship exists. These are asset-owners, for instance, Pension Funds or Government treasuries, that want to adopt the highest standards. This is to ensure that they are following proper guidelines without being influenced by RFPs or investor demands, as they are not working in a competitive environment.
WHY WAS THERE A NEED FOR AN UPDATE?
It is worthwhile mentioning that the updates to the standards have been driven by real demand. The current standards make it difficult for all asset managers to achieve GIPS® compliance, which is why they have actively contributed to the evolution of the standards. Asset managers have seen potential for improving their internal processes through the adoption of GIPS®, and this is reflected in the GIPS® sub-committees, which have been created to ensure that there is proper coverage of the specific subjects.
Improvements to the GIPS® means that there is a need for the solutions used to achieve and maintain GIPS® compliance and to be updated accordingly to help support them.
As the leading provider for composite solutions, StatPro is keeping an eye on what changes are implemented within the upcoming revision and is committed to making sure that StatPro Composites continues to help you achieve your compliance goals.
Having supported over 1000 global GIPS® compliance verifications since 1996 we have continuously proven our ability to follow a proactive strategy and stay at the forefront of all updates by ensuring that these update requirements are met within our composites solution. StatPro Composites 9 is currently being worked on and is a major step towards evolving together with GIPS® 20/20 update.