AIMR’s performance presentation standards will be modified and renamed the U.S. and Canadian versions of GIPS, to be more consistent with the 2-year-old global investment performance standards. According to the Association for Investment Management and Research, the changes, effective Jan. 1, will give investment managers a "global passport,” allowing them to transport reports of their past returns to other countries without having to recalculate the numbers using different performance presentation standards.
The changes will eliminate Level II verification, which allows firms to claim verification of compliance by having to have only their showcase performance composites audited. Level II will be eliminated Jan. 1, 2003. GIPS has only the more rigorous Level I verification, which evaluates all composites of a firm.
Kenneth L. Holmes, director, Peirce Park Group, a consulting firm, who has been critical of the incompleteness of Level II, said he welcomes its elimination.
Most changes in the AIMR standards affect how performance is presented to investors more than how the numbers are calculated, according to the AIMR. The most visible change enables firms to state in advertisements they are AIMR-PPS compliant without having to back up the claim with a full presentation of numbers in the ad. An estimated 75% of U.S. and 60% of Canadian firms are compliant, according to AIMR.
