The Firm Pooled Fund Money-Weighted Return Report is the seventh section of the Global Investment Performance Standards (GIPS) 2020 Exposure Draft. Its focus is on Firms that currently prepare ‘compliant presentations’ for real estate and private equity closed-end funds and those that will qualify to use the Money-Weighted Return methodology to prepare GIPS Reports for Pooled Funds.

Difference Between the Composite & Pooled Fund Money-Weighted Reports

Most of the Standards in this section are the same or similar to that contained in the Firm Composite Money Weighted-Weighted Return Report section and contains 47 Requirements and 16 Recommendations categorized under Presentation & Reporting and Disclosure sub-sections.

The key difference between the Composite Money-Weighted Report and the Pooled Fund Money-Weighted Report is the number of ‘Portfolios’ for which the report is presented for.Whereas the Composite Reports are based on aggregation of Segregated Account ‘Portfolios’ managed to a similar strategy or style, the Pooled Fund Report is based on a single ‘Portfolio’.

This difference results in:

1. the requirement to present a measure of Internal Dispersion for Composite Reports whereas there is no such measure required for Pooled Fund Reports.

2. the requirement to include Pooled Fund portfolios in an appropriate Composite if one exists for its strategy without the need to create specific Composites for Pooled Funds only.

Who Qualifies to Use Money-Weighted Return

Just as with the Firm Composite Money-Weighted Return, not all Firms qualify to present Firm Pooled Fund Money-Weighted Returns. Only Firms that meet the conditions specified under Standard Provision 1.A.31 and as outlined in the Firm Composite Money-Weighted Return Report post here, qualify to present this and it is in addition to the Time-Weighted Returns Report.

Guidance Statements Consolidated

Here too, specific Standards have been drawn from best practice guidance areas like the Guidance Statements and discussions. The Guidance Statements areas included are the same as that of the Firm Composite Money-Weighted Return Report except with respect to Guidance Statement on Carve-Outs, which will not apply in the case of Pooled Funds.

New Standards & Other Notable Changes

The notable new Standards in this section are the same as what is outlined under the Firm Composite Money-Weighted Return Report.

Comments Requiring Feedback by GIPS Organization

The GIPS Organization requires your feedback on the following specific areas:

1. Whether Firms should only be required to present returns for only one period, that is, since inception through to the most recent annual period end for Money-Weighted Return Reports and whether Firms should present Pooled Fund Returns net of fees and expenses (Comment #27).

2. Whether Firms must present returns with and without Subscription Line of Credit, whether returns with such descriptions should be described differently, whether Firms should distinguish between short term and long term Subscription Line of Credit and whether returns with and without Subscription Line of Credit should only be required for Money-Weighted Return presentation only (Comment #28).

3. Whether Firms must only present Committed Capital Distributions and related multiples as of the most recent annual period end only or not (Comment #29).

4. Whether the move to allow Firms to retire certain Disclosures after a period should be allowed and whether the identified sunset Disclosures have been correctly identified (Comment #30).

How to Send in Your Comments

We have made it easy for you to go through the comments in bite-sizes and to submit your responses quickly by completing comment survey forms covering the feedback areas requested and more. At the end of the commenting period (December 31, 2018), we will compile all the comments received and forward to the GIPS Organization for review.

Sign-up for free on our Composite Insider platform here to do so.

Alternatively, you can send your written responses to the GIPS Organization.

In the next post, we review the changes to Asset Owner Fundamentals of Compliance.