The Myths of GIPS®: Money-Weighted Returns for Client Performance Reporting

When measuring performance, results can differ depending on whether money-weighting or time-weighting is used. The time-weighted Global Investment Performance Standards (GIPS) are often viewed as an industry best practice. As a result, GIPS are often applied to all business models. However, money-weighting may actually be the more appropriate way to accurately measure performance. The Myths of GIPS whitepaper addresses the value (and limitations) of time-weighted performance measurement and offers insight into tailoring reporting methods to better serve clients, including:
-The distinct advantages of time-weighted and money-weighted returns
-How to choose the appropriate calculation method
-The benefits of offering a choice of reporting options
This paper will help educate firms on the benefits of using money-weighted versus time-weighted performance measurement.