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7 Cards in this Set

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a.) Explain why the GIPS standards were created, what parties the GIPS standards apply to and who is served by the standards;
 GIPS were created to help standardize calculating and presenting of investment performance for the investment community. GIPS is designed to lead managers to avoid misrepresentations of performance and to communicate all relevant information that prospective clients should know in order to evaluate past results.
 Any investment management firm may comply with GIPS – it is voluntary. However, investment managers must actually manage assets in order to claim compliance (Plan sponsors and consultants may not claim compliance as they are not managing assets directly). Finally, compliance with GIPS must be firm-wide and not achieved on a single product or composite.
 GIPS standards benefit investment management firms and prospective clients. Investment managers can assure clients that by complying with GIPS, their historical record is complete and fairly presented and allows them to participate in competitive bids against other compliant firms. Compliance also could strengthen their internal processes and procedures. Investors benefit by being able to more easily compare performance between firms. DOES NOT REMOVE NEED FOR DUE DILIGENCE but does enhance credibility of managers.
b.) Describe the key characteristics of the GIPS standards and the fundamentals of compliance;
 firms must define an entity that claims compliance
 GIPS are ethical standards for investment performance presentation
 GIPS require firms to include all actual fee-paying, discretionary portfolios in composite and must initially show 5 years of GIPS-compliant history or since inception if less than 5 years. After 5 years of history, firm must add annual performance each year up to 10 years at a minimum
 GIPS require firms to use certain calculation and presentation methods and to make certain disclosures with performance record
 GIPS rely on input data-accuracy is critical
 GIPS contains of provisions that firms are required to follow to claim compliance but are encouraged to adopt recommended provisions to achieve best practice
c.) Explain the construction and purpose of composites in performance reporting;
INCOMPLETE
d.) Describe the scope of the GIPS standards with respect to an investment firm’s definition and historical performance record;
INCOMPLETE
e.) Explain how the GIPS standards are implemented in countries with existing standards for performance reporting and describe the appropriate response when the GIPS standards and local regulations are in conflict;
INCOMPLETE
f.) Name and characterize the eight major sections of the GIPS standards
INCOMPLETE
g.) Explain the requirements for verification of compliance with GIPS standards
INCOMPLETE