Administration June 6, 2001

AIMR Aligns With Global Performance Standards

June 6, 2001 (PLANSPONSOR.com) Reporting of US and Canadian investment returns will be revised to facilitate an "apples to apples" comparison with global standards, following changes approved by the Board of Governors of the Association for Investment Management and Research (AIMR).
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The redrafted standards will replace existing AIMR-PPS standards on Jan. 1, 2002. Firms that claim AIMR-PPS compliance must reflect the changes in their investment reporting no later than December 31, 2001. However, AIMR is encouraging investment managers to adopt the revised standards sooner, if possible.

Those modifications will make it possible for investment managers to “transport” reports on their past investment results to many other countries without having to recalculate the numbers using different rules.

Changes Made

The changes approved by AIMR’s Board bring the eight-year-old AIMR-PPS standards so in line with the two-year-old Global Investment Performance Standards (GIPS) that AIMR is now calling AIMR-PPS “the U.S. and Canadian version of GIPS.”

The changes include three new and five modified requirements. Three previous requirements have been eliminated, and a number of changes have been made to non-mandatory recommendations. Most of the changes affect how performance is presented to investors more than how the numbers are calculated, according to AIMR.

The most publicly visible change is the addition of new guidelines that, for the first time, allow firms to advertise that they are AIMR-PPS compliant without having to back that claim up with a full presentation of its AIMR-PPS calculations in the ad, as required previously.

The redrafted AIMR-PPS standards now incorporate verbatim the GIPS verification language, which has no distinction between firm-wide (Level 1) and composite-specific (Level II) performance.

Just two changes must be adopted retroactively in reports previously compiled – a requirement to disclose the total assets of the firm and a requirement that key disclosures (such as number of portfolios, amount of assets in the composite, and percentage of the firm’s total assets in the composite) must be tied to the last date of the reporting period.

The redrafted AIMR-PPS standards and a comparison table of the changes can be viewed at http://www.aimr.org/standards/pps/ .

– Nevin Adams                                 editors@plansponsor.com

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