Stableford Capital Insights
Why It’s Wise to Choose a GIPS Compliant Investment Firm (Part 1)
Disclosures:
- Stableford Capital claims compliance with the Global Investment Performance Standards (GIPS®).
- GIPS® is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS report and/or our firm’s list of composites, please email your request to inquiries@stablefordcapital.com
Wondering how to compare investment firms around the world to one another’s performance? Check to see if they are GIPS Compliant - do they follow the Global Investment Performance Standards?The GIPS are like the SAT for investment firms: they give potential clients a baseline to compare performance amongst varied firms. You can measure performance on an objective scale across markets, languages, and processes.
What Is GIPS Compliant?
Firms that are GIPS compliant follow the Global Investment Performance Standards. These standards are overseen by the GIPS Executive Committee and were set up by the CFA Institute. Firms opt into following GIPS.
Global Investment Performance Standards grew out of the Association for Investment Management and Research-Performance Presentation Standards (AIMR-PPS). GIPS expanded the international scope of the AIMR-PPS early precedents.
Benefit of Being GIPS Compliant
The main benefit of being GIPS Compliant is having a scale to measure performance and objective information to share with potential investors. This can make a firm stand out and offer transparency when potential investors are trying to find a firm that meets their needs.
Clients want to know they can trust their investment firm. On the international stage, across markets, languages, and processes, it can be difficult to compare success. Firms that use Global Investment Performance Standards make it easier for potential clients to track their success and feel confident in hiring them as their financial investors.
What It Takes to Be GIPS Compliant
With the release of the updated 2020 GIPS, firms will need to address some changes in their standards. When considering investing with a firm that claims to be GIPS compliant, it’s worth verifying that it has updated its processes to match the 2020 edicts.
Reports
GIPS reports have changed. They now include GIPS pooled fund reports. These are now referred to as GIPS composite reports.Reports should be up-to-date within a year so that investors can see the most recent available data. Global Investment Performance Standards are intended to allow investors to compare investment performance to other firms internationally.Having standards based such as GIPS reports ensures a level playing field in that firms cannot hide poor performance and only show excellent performance.
Pursuing GIPS Compliant Investment Options
If you are looking to invest across markets or internationally, pursuing a firm that is GIPS-compliant is ideal. You will have the information you need to know that their performance is up to standards and that your investments are in safe hands. Transparency is essential for confidence in investments.Interested in learning more about GIPS, read part two here.Have questions about working with a GIPS-compliant firm? Talk to an expert at Stableford Capital to clarify some of the details of compliance and how you can choose the right firm. Reach out today at 480.493.2300 or contact us online for a complimentary 15-minute consultation.
