Global Investment Performance Standards Flashcards
What is the purpose of GIPS standards?
It standardizes all investment portfolios of the fund manager that causes people to better compare the different investment options.
What was the reason that people decided to create the GIPS standards?
Because back in the day, there were many cheaters who decided that they could manipulate investment portfolios performances by changing the data they presented to the people:
- representation bias
- survivorship bias
- varying time periods (kinda like representation bias)
How do you know that an investment portfolio is GIPS verified?
GIPS verified means that on the bottom of the investment portfolio, you will see the following statement:
“[Insert name of firm] has been verified for the periods [insert dates] by [name of verifier]. A copy of the verification report is available upon request.”
What are composites in GIPS reporting?
A composite is a portfolio that has stocks that follow either:
- similar investment strategy (long, shorting, hedging strategies)
- similar investment objective (decrease risk and increase return)
- similar mandate (only small cap stocks)
