"morality" exercise: GIPS

A is correct. The GIPS standards were created to help prevent misleading practices such as Representative Accounts, whereby firms select top-performing portfolios to represent the firm’s overall investment results for a specific mandate.

B is incorrect. By including all portfolios a manager no longer manages, any Survivorship Bias is eliminated. Survivorship Bias is a misleading practice that the GIPS standards aim to eliminate.

C is incorrect because. By having consistent reporting styles for performance measurement between asset managers, valid comparisons are easier for the client and potential client to obtain. This was one of the objectives of the GIPS standards.

C is correct. One of the objectives of the GIPS standards is to promote fair competition among investment management firms in all markets; however, this does not require unnecessary entry barriers or hurdles for new firms such as common fee structures.

A is incorrect because the GIPS standards do ensure consistent, accurate investment performance data in areas of reporting, records, marketing, and presentations.

B is incorrect because the GIPS standards do obtain global acceptance of calculation and presentation standards in a fair, comparable format with full disclosure.