3 of 4 money managers GIPS compliant, survey shows

Three out of four money managers responding to a survey said they comply with Global Investment Performance Standards and another 7% said they'll be GIPS compliant within the next 12 months.

While that 75% compliant figure was unchanged from the last eVestment Alliance-ACA Beacon Verification Services survey in 2009, a look behind the survey numbers shows a continued pickup in GIPS compliance globally, according to the survey's authors.

The prior survey was more U.S.-focused, and compliance among U.S. money managers has remained among the highest around the globe, rising over the past three years to 81% from 75%, said Justin S. Guthrie, a partner with ACA Beacon, a provider of GIPS verification and consulting services to investment managers, in a telephone interview.

With a bigger chunk of non-U.S. firms in the latest survey, the overall compliance rate of 75% held steady despite a general rise in adherence to GIPS around the globe, Mr. Guthrie said.

The latest survey showed Australia at the top of the pack, with 83% claiming GIPS compliance, followed by the U.S., then a new “global” category for firms with offices and investment teams in more than one country, at 70%; Asia, 67%; Canada, 57%; U.K., 56%; and Europe, ex-the U.K. and Africa, at 50% each.

Also, 33% of consultants surveyed exclude managers from searches if they don't claim GIPS compliance, and another 48% said they “sometimes” exclude non-compliant managers — a combined 81% of gatekeepers who are saying that non-compliance “works against you,” noted Heath Wilson, co-founder of eVestment Alliance, in the same interview.

Another survey finding: 70% of money managers with less than $500 million in assets under management claimed GIPS compliance, up sharply from 58% in the prior survey, while the percentage of compliant managers with more than $50 billion dropped to 84% from 94%. Managers with between $5 billion and $50 billion fell to 71% from 77%, and managers with between $500 million and $5 billion rose to 77% from 75%. Mr. Guthrie said the relatively small number of firms in those categories for larger AUMs makes it likely those declines were attributable to “skew.”

Cost was cited by managers as the main reason for non-compliance. Mr. Wilson said financial strains in the wake of the 2008 global market crisis may well have been one reason why, despite 12% of respondents predicting in 2009 that they were looking to become GIPS compliant over the coming year, only an additional 6% became so by early 2012.

The “Value of GIPS Compliance: 2012 Manager and Consultant” survey conducted in February and March garnered responses from 339 of 2,193 managers with products listed on eVestment's database as of Sept. 30.