Global Investment Performance Standards (GIPS )

Transcription

1 Global Investment Performance Standards (GIPS ) Guidance Statement on Broadly Distributed Pooled Funds Webinars 21 March 9pm US ET 22 March 11am US ET

2 Broadly Distributed Pooled Funds: AGENDA 1. Brief Overview i. Purpose ii. Defined Terms iii. Required Items iv. Recommended Items 2. Discussion of the Scope of this Guidance i. Funds ii. Firms 3. Next Steps 4. Resources 5. Q&A 2

3 Broadly Distributed Pooled Funds: HOW TO ASK A QUESTION? You may ask your questions by doing the following: Type your question in the Q&A box at the bottom of your screen: We will try to answer your question during the Q&A sessions. If we can t get to your question during the Q&A sessions, or if you have any follow up questions after the webinar, please submit your question to the GIPS Helpdesk at gips@cfainstitute.org and we will respond to you via later. Note: You may download a copy of this presentation at the conclusion of this webinar. 3

4 Broadly Distributed Pooled Funds: PURPOSE Clarity on responsibilities of a GIPS-compliant firm that manages pooled funds In surveys conducted in by the GIPS Executive Committee, 80% of respondents wanted some additional guidance in the form of: New provisions within the Standards New Q&As or guidance statement Expansion of the GIPS Advertising Guidelines 87% of respondents at 2012 GIPS Annual Conference wanted additional guidance 4

5 Broadly Distributed Pooled Funds: PURPOSE Other benefits in addition to greater clarity: Increased comparability of pooled fund information across various jurisdictions Direction in following best practices related to the marketing of broadly distributed pooled funds Enhanced investor confidence 5

6 Broadly Distributed Pooled Funds: DEFINED TERMS Pooled Fund Net/Net Return Time-weighted Net of all fees charged against the fund Sales charges and loads are NOT included in the calculation of the Pooled Fund Net/Net Return Official Pooled Fund Document Document or documents local regulators require to be presented to prospective pooled fund investors prior to or concurrent with initial purchase of a pooled fund 6

7 Broadly Distributed Pooled Funds: DEFINED TERMS Prospective Pooled Fund Investor Investor interested in purchasing a pooled fund targeted by this guidance statement Fund-Specific Marketing Material Electronic or paper format Includes the fund s objective, strategy, and performance Is intended for prospective pooled fund investors who are considering investing in the pooled fund Examples: Fund Fact Sheets, Fund profile sheets etc. 7

8 Broadly Distributed Pooled Funds: REQUIRED ITEMS There are five required items Each required item must appear in Official pooled fund document(s) Fund-specific marketing material, if the marketing material presents investment performance If local laws or regulations prohibit the inclusion of an item in official document(s) and/or in fundspecific marketing material, local laws and regulations must be followed 8

9 Broadly Distributed Pooled Funds: REQUIRED ITEMS 1. Description of the pooled fund s investment mandate, objective, or strategy 2. Indication of risk as required by local regulators; if not required by local regulators, then a risk narrative or metric chosen by firm 9

10 Broadly Distributed Pooled Funds: REQUIRED ITEMS 3. Pooled fund returns calculated according to methodology and for time periods specified by local laws and regulations If calculation methodology is not specified, then a pooled fund net/net return must be presented If time periods are not specified, one of the following must be chosen: 1-, 3-, and 5-year annualized returns Period-to-date returns in addition to 1-, 3-, and 5- year annualized returns Period-to-date returns in addition to 5 years of annual returns 10

11 Broadly Distributed Pooled Funds: REQUIRED ITEMS When calculating pooled fund net/net returns If material is being created for a specific share class, returns must reflect the fees and expenses of that share class If material is not being created for a specific share class Fees and expenses of share class with maximum fee must be used OR Returns for all share classes must be presented 11

12 Broadly Distributed Pooled Funds: REQUIRED ITEMS 4. Benchmark: Benchmark description Benchmark total returns for same time periods as pooled fund 5. Currency used to express performance 12

13 Broadly Distributed Pooled Funds: REQUIRED ITEMS Scenario Analysis #1: If our official pooled fund document and our fund profile both include the benchmark but our product profile does not, would having the benchmark in the official pooled fund document and the fund profile suffice? Must the firm add the benchmark to all marketing material related to the fund? All required items must be in all official pooled fund documents and all marketing material, unless prohibited by local laws and regulations. Remember that the fundspecific marketing material referred to in this guidance is material that contains performance and that is meant for prospective investors in the fund. 13

14 Broadly Distributed Pooled Funds: RECOMMENDED ITEMS 1. Sales charges and loads: Sales charges and loads should be disclosed If sales charges and loads are deducted from pooled fund returns because of local regulations, that deduction should be disclosed 2. GIPS Pooled Fund claim of compliance: XXX, the firm managing this pooled fund, claims compliance with the Global Investment Performance Standards (GIPS ). For more information about the GIPS standards, please visit 14

15 Broadly Distributed Pooled Funds: RECOMMENDED ITEMS Scenario Analysis #2: Can a GIPS-compliant firm that manages and markets pooled funds opt out of this guidance by not including the claim of compliance in its fund materials? Whether or not the firm includes the pooled fund claim of compliance in its fund materials, it must follow this guidance. Note that this is a difference between the pooled fund guidance and the GIPS Advertising Guidelines. The GIPS Advertising Guidelines must be followed only if the firm mentions its compliance with the GIPS standards in the advertisement. 15

16 Broadly Distributed Pooled Funds: COMPLIANT PRESENTATION Offer of a compliant presentation for the pooled fund is neither required nor recommended Firms do not have to provide a compliant presentation for the pooled fund to prospective pooled fund investors unless requested to do so 16

17 Broadly Distributed Pooled Funds: COMPLIANT PRESENTATION Remember that a firm that manages pooled funds and claims compliance with the GIPS standards must still: Have every discretionary portfolio, including the pooled fund, in a composite Be able to produce a compliant presentation for every composite Provide a compliant presentation to a prospective pooled fund investor upon request 17

18 Broadly Distributed Pooled Funds: SCOPE Pooled Funds within the scope of this guidance: The pooled fund is broadly distributed There is limited or no contact between the fund firm and prospective pooled fund investors The guidance only applies to situations in which the firm is marketing a specific investment vehicle a pooled fund that is broadly distributed The guidance does NOT apply to situations in which the firm is marketing a strategy using a composite that includes a pooled fund 18

19 Broadly Distributed Pooled Funds: SCOPE Exceptions: Hedge funds, real estate funds, and private equity funds are not covered by this guidance Although they are broadly distributed, they are excluded from this guidance because they are explicitly covered by other guidance statements: The Guidance Statement on Alternative Investment Strategies and Structures The Guidance Statement on Private Equity The Guidance Statement on Real Estate 19

20 Broadly Distributed Pooled Funds: SCOPE Firms within the scope of this guidance: Include pooled funds in their definition of the firm Create official fund document(s) and marketing material Note that the guidance statement deals solely with information that is delivered to prospective pooled fund investors If a firm is not involved in creating official pooled fund document(s) or fund-specific marketing material for pooled funds, there is nothing in this guidance that would apply to its activities 20

21 Broadly Distributed Pooled Funds: SCOPE Scenario Analysis #3: Firm A and Firm B are both GIPS-compliant firms Firm A manages a pooled fund as a sub-advisor for Firm B Firm A is not responsible for the creation of the fund's official document(s) or fund-specific marketing material, but works with Firm B on the creation of the fund's quarterly commentary and occasionally participates in a sales call with Firm B Firm B markets the fund 21

22 Broadly Distributed Pooled Funds: SCOPE Scenario Analysis #3A: No provision of this guidance statement which deals with requirements and recommendations relating to official pooled fund documents and fund-specific marketing material - would be applicable to Firm A. Firm A must simply follow the normal provisions of the GIPS standards for this subadvised pooled fund portfolio as it must for any of its other discretionary portfolios. 22

23 Broadly Distributed Pooled Funds: SCOPE Scenario Analysis #3B: Firm B must follow this guidance in marketing the pooled fund. Assuming that Firm B creates the official document(s) and marketing material for the pooled fund, the guidance would apply. 23

24 Broadly Distributed Pooled Funds: SCOPE Scenario Analysis #4: Firm B hires an outside law firm to create its official fund documents and its broker-dealer creates the fund s marketing material in its own name. Firm B works with the broker-dealer on the message of the marketing material. The guidance would apply. In this situation, Firm B clearly has input - or the ability to have input - into what is included in official document(s) and fundspecific marketing material. 24

25 Broadly Distributed Pooled Funds: SCOPE Scenario Analysis #5: Firm B is successful in having its fund included on the platform of Firm C. Firm C selects pooled funds from a number of different firms and markets these funds, along with its investment advisory services, to individuals. Firm B has no input into the marketing initiatives of Firm C. 25

26 Broadly Distributed Pooled Funds: SCOPE Scenario Analysis #5 (continued): Official Document(s): Firm B must still prepare the official document(s) for its pooled fund. Whether it prepares the official document(s) itself, or hires a third-party to prepare the document(s), it must follow the pooled fund guidance with respect to the fund s official document(s). 26

27 Broadly Distributed Pooled Funds: SCOPE Scenario Analysis #5 (continued): Fund-Specific Marketing Material: Firm B does not have any influence on the marketing activities of Firm C. Firm C creates the marketing material for its investment advisory services, and for the funds that it offers investors as part of its investment advisory package. The guidance is not applicable to Firm B in this situation. However, if Firm B markets the fund through its own channels, and therefore has input into other fund marketing material, the guidance would apply to these other marketing activities 27

28 Broadly Distributed Pooled Funds: SCOPE Key point: This guidance is applicable if the firm has input into - i.e. the ability to shape - the official document(s) and/or marketing material for a fund That it manages and markets That it has hired a sub-advisor to manage and that it markets 28

29 Broadly Distributed Pooled Funds: SCOPE Scenario Analysis #6: If a firm that claims compliance with the GIPS standards jointly markets its broadly distributed pooled funds with a third party firm, does provision 0.A.16 apply, so that it is clear which firm is claiming compliance? Yes, provision 0.A.16 states that when the firm jointly markets with other firms, the firm claiming compliance with the GIPS standards must be sure that it is clearly defined and separate relative to other firms being marketed, and that it is clear which firm is claiming compliance. 29

30 Broadly Distributed Pooled Funds: NEXT STEPS Comments on the New Guidance: Comment letters should be submitted to by 29 April 2016 Final Guidance: Will be released after comments are considered, and the draft is revised as necessary and approved by the GIPS Technical Committee and the GIPS Executive Committee Expected Effective Date of the Final Guidance: 1 January

31 Broadly Distributed Pooled Funds: RESOURCES Important resources for your reference: Submit your comments on the exposure draft of the guidance statement to GIPS Helpdesk For follow-up questions pertaining to the information presented during this webinar, or for any technical inquiries pertaining to the GIPS standards GIPS Website where you may find: Complete list of guidance statements New Q&A database Brochures & webcasts Newsletter archive GIPS Newsletter Twitter 31

32 Broadly Distributed Pooled Funds: HOW TO ASK A QUESTION? You may ask your questions by doing the following: Type your question in the Q&A box at the bottom of your screen: We will try to answer your question during the Q&A sessions. If we can t get to your question during the Q&A sessions, or if you have any follow up questions after the webinar, please submit your question to the GIPS Helpdesk at gips@cfainstitute.org and we will respond to you via later. Note: You may download a copy of this presentation at the conclusion of this webinar. 32