What is the core reason behind the creation of the Global Investment Performance Standards (GIPS)?

The core reason behind the creation of the Global Investment Performance Standards (GIPS) is to establish a single globally accepted set of investment performance presentation standards. GIPS was developed to create an effective and standardized way for firms to present their investment performance results to clients. This ensures transparency, fairness, and comparability across the investment industry on a global scale. By adhering to these standards, investment firms can demonstrate their commitment to ethical practices and accuracy in reporting performance, allowing investors to make informed decisions based on reliable data.

This focus on a unified set of standards addresses the diverse practices that have historically existed in different regions and markets, helping to bring consistency to performance reporting worldwide. The emphasis is on providing clear and standardized guidelines for how investment performance should be calculated and reported, which helps protect investors and enhances the integrity of the investment profession as a whole.