The CFA Centre for Financial Market Integrity, the policy setting arm of CFA Institute, today released its newest version of the Global Investment Performance Standards, or GIPS standards, which will create a global standard for investment performance reporting.

The Centre says the revised GIPS standards represent the most comprehensive and significant upgrade since their introduction in 1999. They will replace the AIMR-PPS standards, which are a predecessor to the GIPS standards. Used primarily by investment managers in the United States and Canada, the AIMR-PPS standards will fully transition to the GIPS standards on Jan. 1, 2006.

“Moving to one standard globally should simplify the compliance process, as well as eliminate confusion concerning multiple standards in the North American marketplace,” noted Karyn Vincent, CFA, chair of the AIMR-PPS Implementation Committee, in a release. “The revised GIPS standards incorporate many of the best practices already followed by many U.S. and Canadian firms. I believe that the changes reflected in the revised GIPS standards will be welcomed by North American firms.”

Based on the principles of fair representation and full disclosure, the GIPS standards provide an ethical framework for the calculation and presentation of investment performance for investment management firms.

“While compliance is voluntary, the marketplace strongly suggests that firms use GIPS,” said Alecia Licata, senior director of investment performance standards at the CFA Centre. “In fact, a survey released by PricewaterhouseCoopers in June 2004 found that 90% of global asset management firms surveyed were either compliant with the GIPS standards or actively working to become so. So, we strongly recommend that users of AIMR-PPS now begin working on transitioning to the GIPS standards.”

More than 25 sponsors of the GIPS standards worked together with the CFA Centre to establish best practices from each local standard so that investment performance can be compared from one country to another. The CFA Centre is the North American sponsor of the GIPS standards.

The CFA Centre is working on developing a transition plan to support North American users of the AIMR-PPS standards. This plan will be available later in 2005.