Global Investment Performance Standards - GIPS

Sheryl Crow wanted to have some fun. The Chinese warriors in Mulan wanted a girl worth fighting for. And in 1999, the CFA Institute wanted an international set of standards by which to evaluate and compare investment firms around the globe, and GIPS was born.

GIPS stands for “Global Investment Performance Standards,” and it’s basically a list of voluntary guidelines that investment firms around the world can follow…or not, if that’s how they want to roll. But if they do follow them, it can make it a lot easier—and faster—for them to do business with other complying firms and in other countries, since everyone’s on the same page operationally.

So what do these guidelines say, exactly? Well, they’re designed to standardize how investment information is presented to clients and potential investors. In other words, they lay out how fees should be calculated, what things should be called, how investment opportunities should be categorized, and how performance should be measured and reported. The goal here is to ensure that all relevant information is fully disclosed and accurately represented, and that the data can be compared across regional and cultural lines. No secrets, no lies, and no cooked books.

Not only is this helpful for firms looking to become international players, but it’s also really beneficial for investors. If a financial institution is GIPS compliant, we know that it’s legit, and that the info it’s presenting is reliable and accurate.