How Changes in GIPS 2020 Impact PE Firms and Facilitate Future Adoption of the Voluntary Standards

Although voluntary, the CFA Institute’s Global Investment Performance Standards (GIPS) have historically been a de facto requirement for fund managers looking to win mandates from institutional investors. As of 2019, over 1,700 firms, 84 of the top 100 asset management firms and 46 different countries comply with, or have adopted, the GIPS standards. Despite these statistics, GIPS compliance has not always been well received by the private funds industry, as early versions of the standards seemingly ignored pooled investment vehicles and, at times, appeared to conflict with the practices of PE firms. The GIPS standards are currently making strides to embrace the private funds industry by making it far more straightforward for private fund managers to claim compliance under the recently updated edition of those standards (the 2020 GIPS standards). In a guest article, Travis Morgan, managing director of ACA Performance Services, a division of ACA Compliance Group, summarizes the changes introduced by the 2020 GIPS standards that recently took effect and their likely impact on the PE industry. See “The Ins and Outs of GIPS Compliance: What Fund Managers Need to Know About the Voluntary Standards and Pending Revisions” (Aug. 30, 2018); and “Top Ten GIPS Compliance Challenges for Fund Managers” (Oct. 2, 2014).

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