Best Practices for Creating and Maintaining Policies and ... - GIPS

More documents

Recommendations

Info

elieves that no appropriate benchmark exists, no benchmark will be presented and thereason will be disclosed in the compliant presentation.All applicable, required disclosures are included in each compliant presentation andreviewed annually for changes or updates.Procedures to consider:• Firms should establish procedures for updating compliant presentations on at least anannual basis, though the recommended frequency is quarterly.• Firms should establish procedures for reviewing and ensuring the accuracy of compliantpresentations and that all required information is properly included. It is recommendedthat the firm maintain checklists or other relevant procedural documents for ensuring thecompleteness and accuracy of compliant presentations either as part of the firm’s policiesand procedures or as separate documents.• Since the GIPS standards also require adherence to applicable laws and regulationsregarding the calculation and presentation of investment performance results, firmsshould have procedures in place to help ensure that all marketing material has beenreviewed for both regulatory requirements and compliance with the GIPS standardsbefore it is approved for use.Helpful hints:• It may be helpful to include formulas to explain the firm’s methodologies for internaldispersion and three year ex-post standard deviation.XII. Distributing Compliant PresentationsFirms claiming compliance with the GIPS standards must make every reasonable effort toprovide all prospective clients with a compliant presentation. The firm must not choose to whichprospective clients it presents a compliant presentation. Firms must also establish policies andprocedures for determining when an interested party becomes a prospective client.Additionally, firms may choose to reference their claim of compliance with the GIPS standardsin advertising materials. If so, the firm must follow the GIPS Advertising Guidelines or include acompliant presentation in the advertisement. The GIPS Advertising Guidelines provide firmswith options for advertising performance when mentioning the firm’s claim of compliance. TheGIPS Advertising Guidelines do not replace the GIPS standards, nor do they absolve firms frompresenting a compliant presentation as required by the GIPS standards. When following the GIPSAdvertising Guidelines, the firm must meet specific reporting requirements, includingreferencing how a prospective client can obtain a compliant presentation and/or the firm’s list ofBest Practices for Creating and Maintaining GIPS Policies & Procedures Page 20
composite descriptions. If a firm chooses to utilize the GIPS Advertising Guidelines in certainsituations rather than provide a compliant presentation, that fact should be noted in the firm’spolicies and procedures.Example policy:A prospective client is defined as any person or entity that has expressed interest in one ofthe firm’s composite strategies and qualifies to invest in the composite. Existing clients mayalso qualify as prospective clients for any strategy that is different from their currentinvestment strategy. Investment consultants and other third parties are included asprospective clients if they represent investors that qualify as prospective clients. A person orentity will no longer be deemed a “prospective client” if after six months there is no longercommunication with the prospective client or they no longer express interest in the compositestrategy.When initially distributing composite performance information to a prospective client,materials are always accompanied by a compliant presentation. Subsequent marketingpresentations or requests for proposals (RFP) will typically also include a compliantpresentation. At a minimum, all prospective clients that continue to be solicited after twelvemonths have passed will be provided with an updated compliant presentation. In addition,the firm will provide a compliant presentation to any client or prospective client uponrequest.On occasion, the firm may refer to its claim of compliance with the GIPS standards inabbreviated advertisements. In these instances, the advertisement will be prepared inaccordance with the GIPS Advertising Guidelines. A compliant presentation will generallynot be included in the advertisement but will be made available upon request.Procedures to consider:• Firms must establish procedures for determining when an interested party becomes aprospective client and ensuring that the prospect receives a compliant presentation. Aninterested party becomes a prospective client when two tests are met. First, the interestedparty must have expressed interest in a specific composite strategy or strategies. Second,the firm must have determined that the interested party qualifies to invest in therespective composite strategy.• Firms should implement procedures to monitor that all prospective clients have beenprovided with a compliant presentation within the last 12 months at a minimum, if thefirm decides not to provide one more frequently at every touch point along the way. Bestpractice is to create a log to track all prospective clients.Best Practices for Creating and Maintaining GIPS Policies & Procedures Page 21
Page 9 and 10: e included in at least one composit
Page 11: Example policy:Composites include n
Page 14 and 15: e. Subjective unobservable inputs f
Page 16 and 17: Example policy:All performance resu
Page 18 and 19: Example policy:Gross-of-fees compos
Page 22 and 23: • Firms may consider having the c
Page 24 and 25: Since error correction policies wil
Page 26: • Have completed or are candidate

Best Practices for Creating and Maintaining Policies and ... - GIPS

Create successful ePaper yourself

Delete template?

Save as template?