Recent GIPS and Performance Reporting Developments

Kreischer Miller recently held its annual investment industry update, which covered a variety of topics including an update on GIPS and performance reporting. The key topics of the GIPS update centered on current projects, available resources, recently issued Q&A’s, and the results of an industry survey on the calculation and presentation of net returns.

In the past year, the CFA Institute has focused on several initiatives to better align the needs of end users with the resources it has made available. Specifically, it recently created the OCIO (Outsourced Chief Investment Officer) Working Group. OCIO firms often perform significant custom and ad hoc reporting outside of the GIPS composites, and the goal of the new working group is to better align the needs of OCIO firms with GIPS reporting standards. More information on this topic is expected to be released later in 2023 in the form of a consultation paper.

In addition to the working group, the CFA Institute has also developed several new tools and resources for firms to assist in complying with the GIPS standards. These tools include sample policies, supporting calculations under various methodologies, model RFP templates, and guidance on how the SEC’s new Marketing Rule impacts GIPS compliant firms. It has also provided a disclosure checklist for firms to use when preparing their GIPS reports. We recommend that clients utilize these tools as a part of their process to update GIPS reports and maintain compliance.

The final presentation topic outlined a recent USIPC survey on net of fee reporting. In early 2021, the USIPC conducted a survey to gather information on how firms report their net of fee performance. The survey garnered responses from a variety of firms, ranging from less than $250M in assets to greater than $250B. The main takeaways were that larger firms tend to find it more practical to use model fees, whereas smaller firms lean towards using actual fees. The survey also highlighted other key findings such as reporting for pooled funds included in a composite, cash vs. accrual fee calculations when using actual fees, and considerations when composites include non-fee-paying accounts.

We recommend that firms use the CFA Institute resources highlighted above and be on the lookout for future information releases. If you’d like to view the full version of this presentation or any of the other presentations from our annual investment industry update, you can access the videos here.

If you have any questions about this information or would like to discuss your firm’s needs, please contact Eric Levandowski, Manager, Investment Industry Group.


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