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Ethics - GIPS Standards

Terms in this set (30)

Section 0
Fundamentals of Compliance
Section 1
Input Data Provisions
Section 2
Calculation Methodology
Section 3
Composite Construction
Section 4
Disclosure
Section 5
Presentation and Reporting
Section 6
Real Estate
Section 7
Private Equity
Adherence to the Law Provision
must adhere to the law even if it conflicts with GIPS in rare cases
Partial vs. Full Compliance
no claims of partial compliance can be made without full firm-wide compliance
Prospective Client Presentation Frequency Provision
a firm must provide a compliant presentation to all prospective clients if it has provided such a presentation to a prospective client within the past 12 months
GIPS Advertisement Definition
anything written or in electronic form designed for prospective clients, at least two at a time
GIPS Advertising Guidelines (6 things)
disclose the definition of the firm, the currency used, composite returns and description, GIPS compliance claim, whether returns are presented net of fees, benchmarks
Valuation Frequency (Section 1)
monthly valuation and at year end, and on large cash flows
Trade Date Accounting
GIPS requirement in which firms must use dates when trades were agreed, not when they are settled
GIPS Accrual Accounting Provision
firms must use accrual accounting for any security that generates interest income, meaning that income is recognized when earned not when received (excludes dividends)
GIPS Composite Total Returns Provision
total returns must be included for GIPS composites, which includes cash and cash equivalent returns
GIPS Time-Weighted Returns Provision
geometric returns that show the true change in value of a portfolio over time must be used and they must adjust for daily-weighted external cash flows, using actual trade expenses
GIPS Asset-Weighted Composite Returns Provision
composite returns must be calculated using asset-weighted portfolio returns and the asset-weighting must be rebalanced at least monthly
GIPS Rule about Types of Portfolios to Include in Composites
all fee-paying discretionary portfolios must be included in at least one composite, while non-discretionary and simulated portfolios must be excluded
GIPS Minimum Asset Level Composite Policy
there can be a minimum asset level for portfolios to be included in a composite, but this threshold cannot be changed retroactively
GIPS Composite Definition Policy
composites must be defined explicitly by strategy (i.e. small-cap value, large-cap growth)
GIPS Carve-Out Policy
for a composite with multiple asset classes, you cannot carve out just one asset class performance and report it separately
GIPS Composite Risk Measure Policy
firms choosing not to report three-year annualized standard deviation must offer an explanation of why this is not an appropriate measure of risk and provide an alternative measure
GIPS Historical Performance Minimum Number of Years Policy (Initial Presentation)
historical performance must be presented for a minimum of five years, or for all years since inception if fewer than five
GIPS Historical Performance Presentation Policy for After the Initial Presentation
after initial presentation of five years or time since inception, firms are required to continue adding a year of presentation information until 10 years of data are presented
Non-GIPS Compliant Performance Reporting Policy
firms may present non-GIPS compliant performance as long as only GIPS compliant performance is presented for periods after January 1 2000, and the non-compliance for the earlier periods is disclosed
Real Estate - Valuation Policy
real estate investments should be valued with the fair value provisions of GIPS
Real Estate - External Valuation Frequency
external valuations are to be performed by a professionally certified appraiser every 12 months, but if the client agrees, it can be once every 36 months
Real Estate - Portfolio Returns Policy
portfolio returns must be calculated at least quarterly
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