Practical Portfolio Performance Measurement and Attribution, Second Edition

Appendix E

The Global Investment Performance Standards¹²

I. PREFACE: BACKGROUND OF THE GIPS

A. Preamble – why is a global standard needed?

1. The financial markets and the investment management industry are becoming increasingly global in nature. Given the variety of financial entities and countries involved, this globalization of the investment process and the exponential growth of assets under management demonstrate the need to standardize the calculation and presentation of investment performance.

2. Prospective clients and investment management firms will benefit from an established standard for investment performance measurement and presentation that is recognized worldwide. Investment practices, regulation, performance measurement, and reporting of performance results vary considerably from country to country. Some countries have guidelines that are widely accepted within their borders, and others have few recognized standards for presenting investment performance.

3. Requiring investment management firms to adhere to performance presentation standards will help assure investors that the performance information is both complete and fairly presented. Investment management firms in countries with minimal presentation standards will be able to compete for business on an equal footing with investment management firms from countries with more developed standards. Investment management firms from countries with established practices will have more confidence that they are ...