LM4: Interoduction To Global Investment Performance Standards (GIPS) Flashcards
What are the 6 key concepts of GIPS?
-fair representation & full disclosure of performance
-calculation methodology
-compliance
-GIPS evolving still
-create and maintain composites for all strategies
-integrity of data.
What does GIPS stand for?
Global Investment Performance Standards (GIPS)
Who can claim compliance with GIPS?
Any firm that manages actual assets may choose to comply with the GIPS standards
Why where GIPS created?
To avoid misrepresentation in performance, and to stay consistent with different portfolios
What is a composite?
Aggregation of one or more portfolios managed according to a similar investment mandate, objective, or strategy
What is verification in GIPS standards?
Once a firm is in compliance with GIPS standards, independent third party to perform verification to increase confidence in firms claim of compliance
What are non-discretionary portfolios?
one in which the investor decides on what trades to make. In these accounts, brokers act as a facilitator; they merely receive and execute the clients requested trades, attempting to get the best prices possible for the investor.
What is tokenization?
Represents ownership of physical assets on a distributed ledger
What are 3 performance reporting practices that lead to the creation of GIPS, describe them? RSV
- Representative Accounts (presenting top performing portfolio’s to be representative)
- Survivorship Bias (adjusting return for composite by removing portfolios terminated)
- Varying Time Periods (use time periods in favor of portfolio)
Do terminated portfolios have to be included in composites according to GIPS?
yes they do
Does a firm have to provide a GIPS composite report to all prospective clients?
yes they do
Can members state they passed all three levels of CFA on three tries?
yes if true
