Charlottesville, Va. (Jan. 9, 2003) -- The Association for Investment Management and Research has added new provisions related to fee disclosure and private equity valuation to its Global Investment Performance Standards.
In a move aimed at making it easier for investors to compare fees and investment returns, the new GIPS fee provisions, effective Jan. 1, 2005, provide a standardized approach, based on the principles of fair representation and full disclosure, for firms to calculate and report their investment returns. The fee provisions use the gross-of-fees return less the investment management fee that the prospective client expects to pay as the basis for comparison. The provisions recommend that firms show gross-of-fees performance results, but require them to disclose in each presentation the appropriate fee schedule for both the product being sold and the type of prospective client being shown the results. All returns (gross and net) must be calculated after the deduction of the actual trading expenses incurred during the period.
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