What are the GIPS Advertising Guidelines and when should a firm use them?

Question

AcadiFi · Accepted Answer

The GIPS Advertising Guidelines provide an optional, simplified framework for claiming GIPS compliance in advertisements — which by nature are short and cannot include the full compliant presentation. Firms may use them for marketing materials such as fact sheets, pitchbooks, or digital ads.

**Key distinction:** The Advertising Guidelines are NOT a substitute for the full GIPS presentation. They are a permitted abbreviated format for advertising contexts, while requiring the firm to make the full compliant presentation available on request.

**Required elements in a GIPS-compliant advertisement:**

1. **Firm definition** — how the firm claims compliance
2. **Composite description** — strategy/mandate
3. **Claim of compliance statement** — exact wording specified by GIPS
4. **How to obtain** — firm contact for full compliant presentation and list of composites
5. **Composite returns** — at minimum one of:
   - 1, 3, 5-year annualized gross/net returns through most recent period, OR
   - Period-to-date + annual returns for most recent 5 years
6. **Benchmark returns** for same periods

**Optional but common additions:** firm AUM, composite AUM, investment objectives.

**Required claim-of-compliance language:**
'[Firm] claims compliance with the Global Investment Performance Standards (GIPS) and has prepared and presented this report in compliance with the GIPS standards. [Firm] has been independently verified for the periods [dates].'

Example: Redstone Capital's fact sheet for the 'Redstone US Small-Cap Growth' strategy shows:
- 1Y return: 18.4% gross / 17.5% net
- 3Y annualized: 12.1% gross / 11.3% net
- 5Y annualized: 10.8% gross / 10.0% net
- Russell 2000 Growth benchmark: 16.9%, 10.5%, 9.2%
- Firm AUM $4.8B, composite AUM $620M
- GIPS compliance claim statement
- 'Full compliant presentation and list of composites available at redstonecapital.com/gips or by emailing gips@redstonecapital.com'

```mermaid
flowchart LR
  A[Marketing need] --> B[Use Ad Guidelines]
  B --> C[Required elements]
  C --> D[Firm def]
  C --> E[Composite desc]
  C --> F[Claim statement]
  C --> G[Returns 1/3/5Y]
  C --> H[Benchmark]
  C --> I[How to get full pres]
```

Failure to include required elements while claiming GIPS compliance in advertising is a GIPS violation and may constitute false advertising under securities regulation.

What are the GIPS Advertising Guidelines and when should a firm use them?

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