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PO Box 131 Ferndale, 2160 South Africa Telephone: +27 11 791-0105 Fax: +27 11 791-0107 Executive Office: Unit 2, West Square, 407 West Avenue, Ferndale, Johannesburg www.cfa.ac.za [email protected] Press Release Attention Finance Desk For Immediate Release 7 December 2010 Alert for Investment Managers: Revised Global Investment Performance Standards (GIPS) Come into Effect in January 2011 Revised standards provide new requirements on risk and valuation CFA Institute is reminding investment managers that the latest edition of the Global Investment Performance Standards (GIPS), which CFA Institute announced earlier this year, will come into effect in January 2011. Changes include risk disclosure and using fair value reporting methods for investment management firms claiming compliance with the GIPS standards. Commenting on the revisions CFA charterholder and executive director of the GIPS standards at CFA Institute, Jonathan Boersma said, “The GIPS standards, which were introduced in 1999, advance the principles of fair representation and full disclosure when presenting historic investment performance. With the demand for greater transparency, the GIPS standards provide investment managers the opportunity to demonstrate their commitment to integrity and ethical practice, both of which are critical to building trust. Investors should ask or, better yet, demand that investment managers comply with the GIPS standards and that they be verified.” Some of the most marked changes that will take place in January are: Fair Value – The GIPS standards will require that assets be valued using a fair value methodology when no market value is available. A recommended valuation hierarchy is included as an appendix in the latest edition. Risk – Risk should be addressed in the GIPS standards because understanding past performance requires an understanding of the risks taken to achieve the performance. Firms will be required to present the standard deviation (widely accepted as a common measure of portfolio risk) of the monthly returns of both the composite and the benchmark. Directors of CFA South Africa TB Berry, CFA; AC Canter, CFA; M Efstathiou, CFA; PJ Knibbs, CFA; E Louw, CFA; L Raff, CFA; NJ Suliaman, CFA; AD Thompson, CFA; NL Waisberg, CFA Executive Officer: Ann Marie Wood CFA South Africa is a society formed under the auspices of the CFA Institute, Charlottesville, Virginia, USA CFA and Chartered Financial Analyst are registered trademarks Compliance Statement and Verification Status – The revised GIPS standards will require firms to disclose their verification status (i.e. whether they have or have not been verified) and also require prescribed language describing what is and is not covered by verification. Based on the principles of fair representation and full disclosure, the GIPS standards provide an ethical framework for the calculation and presentation of investment performance for investment management firms. The GIPS standards benefit investment management firms, investment consultants, and both prospective and existing clients. For example: Investment managers that adhere to investment performance standards contribute to investor confidence that the firm’s investment performance is complete and fairly presented. Both prospective and existing clients benefit from a global investment performance standard by having a greater degree of confidence in the performance information presented to them. Global standardisation of investment performance reporting gives investors around the world the additional transparency they need to compare investment managers and allow managers to fairly compete for new business in foreign markets. The latest edition reflects the joint cooperation with Country Sponsor organisations in 32 countries that help develop and promote the adoption of the GIPS standards. The revisions were developed by the GIPS Executive Committee, the CFA Institute governing body for the GIPS standards, composed of nine senior investment industry members representing stakeholders around the globe. The GIPS Executive Committee is supported by more than 100 volunteers serving on 15 subcommittees and working groups, each with diverse and indepth industry experience. For more information about the GIPS standards, visit the GIPS website. CFA Institute CFA Institute is the global association for investment professionals. It administers the CFA and CIPM curriculum and exam programs worldwide; publishes research; conducts professional development programs; and sets voluntary, ethics-based professional and performance-reporting standards for the investment industry. CFA Institute has more than 100,000 members, who include the world’s 90,000 CFA charterholders, in 135 countries and territories, as well as 135 affiliated professional societies in 58 countries and territories. More information may be found at www.cfainstitute.org. Directors of CFA South Africa TB Berry, CFA; AC Canter, CFA; M Efstathiou, CFA; PJ Knibbs, CFA; E Louw, CFA; L Raff, CFA; NJ Suliaman, CFA; AD Thompson, CFA; NL Waisberg, CFA Executive Officer: Ann Marie Wood CFA South Africa is a society formed under the auspices of the CFA Institute, Charlottesville, Virginia, USA CFA and Chartered Financial Analyst are registered trademarks About CFA South Africa CFA South Africa, an affiliate of CFA Institute, serves the investment community of Southern Africa by promoting the highest standards of professional excellence and integrity. In our mission to promote global-best-practice, CFA South Africa supports the CFA Code of Conduct & Standards of Practice and the Chartered Financial Analyst (CFA) Programme. CFA South Africa members are principally investment and financial service professionals, academics, and regulators. CFA South Africa is a non-profit organisation that seeks to be financially sustainable. More information may be found at http://www.cfa.ac.za/index.html Media Contacts: CFA Institute Kathy King Washington, DC +1 (434) 227-2177 Email: [email protected] Sarah-Jane Purvis New York +1 (212) 705-1738 Email: [email protected] Leandi Cameron South Africa Cell: 071 606 5553 Email: [email protected] CFA South Africa Executive Officer Ann Marie Wood Tel: 011-791 0105 Email: [email protected] Directors of CFA South Africa TB Berry, CFA; AC Canter, CFA; M Efstathiou, CFA; PJ Knibbs, CFA; E Louw, CFA; L Raff, CFA; NJ Suliaman, CFA; AD Thompson, CFA; NL Waisberg, CFA Executive Officer: Ann Marie Wood CFA South Africa is a society formed under the auspices of the CFA Institute, Charlottesville, Virginia, USA CFA and Chartered Financial Analyst are registered trademarks