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IPE special report May 2018

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Industry embraces GIPS

A quarter of respondents to a survey of compliance with AIMR/ GIPS performance presentation standards amongst Europe's top 150 investment managers have revealed they are fully compliant, with the rest saying they will adhere within the next two years.
And the survey by PricewaterhouseCoopers (PWC) in London shows 60% of respondents believing the European GIPS standards will be perceived as an equivalent to the US AIMR-PPS standards within five years.
Accordingly, the majority of managers indicated GIPS as their standard of choice, believing it more relevant to the continental investment scene and more applicable to global players.
One possible reason cited by the report for the difficulty in becoming AIMR/GIPS compliant in Europe is the average number of composites held by continental managers in comparison to their US counterparts.
Some 50% of respondents in Europe held more than 20 and 31% more than 50. In the US 55% reported having less than 10 - reflecting the bespoke nature of mandates and broader line of currency briefs in Europe.
Furthermore, only 47% of respondents in Europe used spreadsheets to calculate composite results, reflecting the relative lack of sophistication in this area.
Louise Spencer, senior manager at PWC, says: There are obviously issues like the euro and the Y2K problem which have taken precedence over perfomance standards questions, but in actual fact cost effective software is available to make the transition painless, and any company saying they are waiting for GIPS to arrive before they take the plunge is perhaps slightly misinformed, because the core elements are exactly the same as AIMR-PPS.
"What we are seeing though is that those managers which are GIPS compliant are doing good business on the back of it, and companies like Credit Suisse are saying the standards have enabled them to sharpen up back office anomalies, co-ordinate investment strategies and improve market impact."
The report, the first of its kind on the continent garnered a 21% response rate from the managers polled."

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