About Me
Chartered Financial Analyst (CFA)
1 Ethical and Professional Standards
1-1 Code of Ethics
1-2 Standards of Professional Conduct
1-3 Guidance for Standards I-VII
1-4 Introduction to the Global Investment Performance Standards (GIPS)
1-5 Application of the Code and Standards
2 Quantitative Methods
2-1 Time Value of Money
2-2 Discounted Cash Flow Applications
2-3 Statistical Concepts and Market Returns
2-4 Probability Concepts
2-5 Common Probability Distributions
2-6 Sampling and Estimation
2-7 Hypothesis Testing
2-8 Technical Analysis
3 Economics
3-1 Topics in Demand and Supply Analysis
3-2 The Firm and Market Structures
3-3 Aggregate Output, Prices, and Economic Growth
3-4 Understanding Business Cycles
3-5 Monetary and Fiscal Policy
3-6 International Trade and Capital Flows
3-7 Currency Exchange Rates
4 Financial Statement Analysis
4-1 Financial Reporting Mechanism
4-2 Income Statements, Balance Sheets, and Cash Flow Statements
4-3 Financial Reporting Standards
4-4 Analysis of Financial Statements
4-5 Inventories
4-6 Long-Lived Assets
4-7 Income Taxes
4-8 Non-Current (Long-term) Liabilities
4-9 Financial Reporting Quality
4-10 Financial Analysis Techniques
4-11 Evaluating Financial Reporting Quality
5 Corporate Finance
5-1 Capital Budgeting
5-2 Cost of Capital
5-3 Measures of Leverage
5-4 Dividends and Share Repurchases
5-5 Corporate Governance and ESG Considerations
6 Equity Investments
6-1 Market Organization and Structure
6-2 Security Market Indices
6-3 Overview of Equity Securities
6-4 Industry and Company Analysis
6-5 Equity Valuation: Concepts and Basic Tools
6-6 Equity Valuation: Applications and Processes
7 Fixed Income
7-1 Fixed-Income Securities: Defining Elements
7-2 Fixed-Income Markets: Issuance, Trading, and Funding
7-3 Introduction to the Valuation of Fixed-Income Securities
7-4 Understanding Yield Spreads
7-5 Fundamentals of Credit Analysis
8 Derivatives
8-1 Derivative Markets and Instruments
8-2 Pricing and Valuation of Forward Commitments
8-3 Valuation of Contingent Claims
9 Alternative Investments
9-1 Alternative Investments Overview
9-2 Risk Management Applications of Alternative Investments
9-3 Private Equity Investments
9-4 Real Estate Investments
9-5 Commodities
9-6 Infrastructure Investments
9-7 Hedge Funds
10 Portfolio Management and Wealth Planning
10-1 Portfolio Management: An Overview
10-2 Investment Policy Statement (IPS)
10-3 Asset Allocation
10-4 Basics of Portfolio Planning and Construction
10-5 Risk Management in the Portfolio Context
10-6 Monitoring and Rebalancing
10-7 Global Investment Performance Standards (GIPS)
10-8 Introduction to the Wealth Management Process
10.7 Global Investment Performance Standards (GIPS) Explained

10.7 Global Investment Performance Standards (GIPS) - 10.7 Global Investment Performance Standards (GIPS) Explained

Key Concepts

Global Investment Performance Standards (GIPS)

The Global Investment Performance Standards (GIPS) are a set of ethical principles that provide a framework for calculating and presenting investment performance results. They aim to ensure that performance information is presented in a way that is complete, accurate, and fairly represents the investment management process.

Example: A global asset management firm uses GIPS to standardize the way it reports performance across all its offices worldwide, ensuring consistency and comparability of results.

Compliance

Compliance with GIPS means adhering to all the rules and guidelines set forth by the standards. This includes following specific methodologies for calculating returns, presenting performance, and disclosing relevant information.

Example: A hedge fund manager ensures that all performance calculations are done using time-weighted returns and that all fees and expenses are properly disclosed, as required by GIPS.

Transparency

Transparency in GIPS refers to the openness and clarity with which performance results are presented. This includes providing sufficient detail to allow investors to understand how the performance was achieved and any assumptions or methodologies used.

Example: An investment firm discloses the use of leverage and derivatives in its performance reports, along with explanations of how these instruments contributed to the overall returns.

Consistency

Consistency in GIPS means applying the same performance presentation standards across all portfolios and time periods. This ensures that performance results are comparable and that no biases are introduced.

Example: A mutual fund company uses the same calculation methodology for all its funds, whether they are equity, bond, or balanced funds, ensuring that investors can compare performance across different types of investments.

Fair Representation

Fair Representation in GIPS involves presenting performance results in a way that accurately reflects the investment process and does not mislead investors. This includes avoiding cherry-picking of best-performing portfolios or time periods.

Example: An investment advisor presents the performance of all its managed accounts, including those with poor performance, rather than only showcasing the best-performing ones.

Verification

Verification in GIPS is the process of having an independent third party review and confirm that the firm's performance presentation complies with GIPS standards. This adds credibility and trust to the performance reports.

Example: A private equity firm hires an external auditor to verify that its performance calculations and disclosures comply with GIPS, providing assurance to investors that the reported results are accurate and compliant.

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