Standard III(D) Performance Presentation

what is Standard III(D) Performance Presentation?

When communicating investment performance information, Members and Candidates must make reasonable efforts to ensure that it is fair, accurate, and complete.

what are the four key parts to this rule?

1. Present Performance Fairly

• Performance results must not be exaggerated or selectively displayed.

  • Showing only the best-performing accounts.

  • Omitting poor-performing periods.

  • Advertising returns without disclosing important limitations.

  • Claiming responsibility for returns that were not actually generated by the member.

2. Ensure Performance Information Is Accurate

• make reasonable efforts to verify calculations and data before communicating performance.

3. Ensure Performance Information Is Complete

• Clients should receive enough information to properly evaluate results.

  • Time period covered.

  • Benchmark used (if applicable).

  • Investment strategy.

  • Significant assumptions.

  • Fees and expenses.

  • Material risks.

4. No Misleading Implications About Future Returns

• Past performance cannot be presented in a way that suggests future results are guaranteed.

who does this apply to?

The standard applies whenever a member claims responsibility for performance, including:

• Separate accounts

• Mutual funds

• Hedge funds

• Composite performance

• Research analysts promoting recommendation success rates

Recommendations for Members

• Encourage firms to adhere to Global Investment Performance Standards.

• Consider the sophistication of the audience to whom a performance presentation is addressed.

• Present the performance of a weighted composite of similar portfolios rather than the performance of a single account.

• Include terminated accounts as part of historical performance and clearly state when they were terminated.

• Include all appropriate disclosures to fully explain results (e.g., model results included, gross or net of fees, etc.).

• Maintain data and records used to calculate the performance being presented.