Around the Peak.

Mission-driven institutions are entrusted with something larger than capital. They are entrusted with purpose.

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Endowments, foundations, and long-term investment pools exist to support education, healthcare, research, environmental initiatives, religious or cultural programs, community development, and countless other causes—often for generations.

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That long-term horizon changes how investment performance should be reported. Because when an institution thinks in decades instead of quarters, investment performance is not just about what happened recently, itis about whether the portfolio is structured to sustain spending, preserve purchasing power, and remain aligned with its mission through full market cycles.

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Many institutions rely entirely on their investment managers to calculate and present investment performance. That’s common, but it’s not always sufficient.

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Performance Oversight Is Not the Same as Performance Results

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Investment managers are responsible for generating returns. Boards and oversight committees are responsible for evaluating those results.

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Those responsibilities are distinct.

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Oversight is a fiduciary duty. It is not passive, and it cannot rely solely on the information created by the party being evaluated. Effective oversight requires independence, consistency, and clarity.

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When the same party both manages assets and determines how performance is calculated and presented, the lines between management and oversight can blur—even when intentions are sound and calculations are technically accurate.

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In some situations, reporting may not be:

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• Consistent across managers
• Based on uniform calculation methodologies
• Presented in a format designed for governance review
• Structured to facilitate long-term policy evaluation

Consider a board reviewing results from three different managers. Each reports strong performance, but one calculates returns net-of-fees, another presents gross results, and a third uses slightly different valuation timing.

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At first glance, the numbers appear comparable. In reality, they may not be measuring the same thing.

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Some larger institutions maintain internal performance teams or engage independent performance professionals to standardize reporting, organize data across managers, and present results in accordance with established best practices—often aligning reporting with their Investment Policy Statement and/or recognized frameworks such as the Global Investment Performance Standards (GIPS® standards).

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But many of these organizations operate lean. They may not have dedicated performance measurement expertise or the infrastructure required to consolidate, normalize, and present results in a governance-ready format.

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In those cases, boards are often reviewing manager-produced materials that were designed primarily for client communication—not institutional oversight. Performance reporting for these institutions should be designed to serve the governing body—not simply to showcase results.

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Why This Matters for Mission-Based Institutions

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Boards of endowments and foundations are often composed of dedicated volunteers, philanthropists, community leaders, and subject-matter experts. They bring vision, experience, and commitment to the institution’s mission—but not always a deep understanding of investment management and reporting.

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That makes investment performance clarity essential. When reporting is unclear, oversight weakens—not because trustees lack commitment, but because the information is not presented in a way that supports meaningful evaluation.

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When reporting is structured and tied directly to policy benchmarks, risk parameters, and spending objectives, trustees know what questions to ask. Conversations remain focused on long-term sustainability and mission impact.

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A Practical Framework for Strong Performance Reporting

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Boards of mission-driven institutions are often operating at the governance-level and should evaluate their reporting structure against four questions:

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1. Is performance calculated independently?

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Independent calculation or oversight reduces potential conflicts and strengthens fiduciary governance. In institutional investing, separating portfolio management from performance oversight is widely viewed as a best practice.

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2. Is the methodology consistent across managers?

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Multi-manager portfolios require uniform return calculation, fee treatment, and valuation policies to ensure comparability. Without consistency, “relative performance” becomes difficult to interpret.

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One practical way institutions address this challenge is by complying with and requiring their managers to comply with the GIPS® standards.

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The GIPS standards are a globally recognized framework administered by CFA Institute designed to promote fair representation and full disclosure in the calculation and presentation of investment performance.

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Endowments and foundations that adopt the GIPS standards for their own performance calculations—and require the same of the managers they hire—send a powerful message to their boards and stakeholders that the institution is committed to transparency in how results are calculated and presented.  

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3. Is reporting aligned with policy benchmarks?

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Boards should see performance relative to long-term policy objectives, not just absolute returns. And this information should be shown at the level at which it is managed. Simply reporting that “the portfolio returned 8%” does not answer the real governance question.

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A portfolio can have a positive year and still fail to meet its strategic role within the overall allocation.

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For example:

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• Did the equity allocation meet its return objective relative to its benchmark?
• Did the diversifying strategies provide the downside protection they were intended to deliver?
• Did fixed income serve its role as a stabilizer?
• Did alternative investments justify their complexity and liquidity constraints?

Even if the overall portfolio met its expected return, boards should understand how it got there. Reviewing performance by allocation allows boards to evaluate whether each segment is fulfilling its mandate, not just whether the total return looks acceptable.

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When reported this way, it becomes easier to see where the portfolio is meeting expectations and where it may be falling short.

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4. Is communication designed for governance?

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Once performance is aligned to policy benchmarks, reporting should help trustees interpret what the results mean without requiring them to operate at the manager or security-selection level.

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Reports should help answer key questions:

·        Are we meeting long-term objectives?

·        How are managers performing relative to their mandates?

·        Is risk aligned with the investment policy?

·        Are we preserving capital appropriately given our spending needs?

·        Did managers follow investment guidelines that align with our institution’s mission?

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If any of these areas underperform, governance-level reporting should prompt clear, high-level discussion: Why did this occur? Was the result consistent with expectations? What steps, if any, are being considered to address issues going forward? If shortfalls persist, boards may need to evaluate whether the strategy or manager remains appropriate.

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This kind of oversight strengthens outcomes by reinforcing accountability. Performance reporting should be communicated in plain language and simplify complex data into clear actionable insight. When this occurs, it enables boards to move from procedural review toward informed, effective governance.

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From Calculation to Communication

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Accurate returns are the starting point. Clear communicationis the outcome.

When performance calculation, oversight, and presentation are thoughtfully structured, board discussions become more strategic and less reactive. Boards gain confidence in their oversight, managers operate within clearer expectations, and the institution stays focused on its purpose.

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A Closing Thought

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Mission-driven institutions think in decades, not quarters. Their performance reporting should reflect that same discipline. Investment oversight is not just about generating returns, it is about ensuring those returns are measured, understood, and aligned with the institution’s long-term purpose.

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Clear reporting strengthens governance.
Strong governance protects sustainability.
And sustainability protects the mission.

If you’ve been around the Global Investment Performance Standards (GIPS®) long enough, you know that governance is one of those topics everyone agrees is important, but far fewer firms can clearly explain what good governance with the GIPS standards actually looks like day to day.

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Most firms don’t fail at GIPS compliance because they misunderstand a technical requirement. They struggle because ownership is unclear, decisions are informal, or key knowledge lives in one person’s head. When that person leaves (or when the firm grows) things start to break.

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So, let’s simplify this.

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Below is a practical, real-world view of what good governance looks like when complying with the GIPS standards—not in theory, not in a policy document that no one reads, but in how well-run firms actually operate.

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Start with the Right Mindset: Governance Is About Sustainability

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At its core, GIPS compliance exists to answer one question:

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Can this firm consistently calculate, maintain, and present performance fairly and accurately—regardless of growth, staff changes, or market stress?

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The GIPS standards are built on the principles of fair representation and full disclosure, but governance is what turns those principles into repeatable behavior. Good governance doesn’t mean more paperwork or compliance headaches. It means clear accountability, documented decisions, and controls that actually get used.

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1. Clear Ownership (It’s Rarely Just One Person)

One of the most common governance risks we see is a “GIPS compliance department of one” where critical knowledge, decisions, and processes are concentrated with a single individual. While this can work in the short term, it creates challenges around continuity, oversight, and scalability as the firm grows or changes.

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Good governance starts by clearly defining:

• Who owns GIPS compliance overall
• Who performs monthly/quarterly/annual tasks
• Who reviews and approves key inputs/outputs
• Who resolves judgment calls
• Who ensures it also complies with other relevant regulations  

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In practice, this often looks like:

• A GIPS compliance committee or designated governance group
• Representation from performance, compliance, operations, and senior management
• Defined escalation paths for gray areas (e.g., discretion, composite changes, error corrections)

When a firm isn’t large enough to support a formal committee, outsourcing to a GIPS compliance consultant or a provider of managed services can be an effective alternative. These individuals can help you design policies, create procedures, and essentially manage governance for you.

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But even if you are big enough, having an independent third party on your GIPS compliance committee can provide an objective, well-informed perspective formed by experience across many firms and a deep understanding of what works well in practice.

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2. Policies and Procedures That Reflect Reality

Every GIPS compliant firm has GIPS standards policies and procedures (GIPS standards P&P). Well-governed firms actually use them.

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Strong GIPS compliance governance means your GIPS standards P&P:

• Include procedures your firm actually follows instead of only stating policies
• Reflect how performance is really calculated
• Clearly document firm-specific elections and judgments
• Are updated when the business changes (for new products, systems, asset classes)

Think of your GIPS standards P&P as the firm’s operating manual for performance, not a static compliance artifact. If someone new joined your performance team tomorrow, they should be able to follow your policies and procedures to calculate performance and arrive at the same results. If not, governance needs work.

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3. Formalized Review and Oversight

Good governance includes independent review, even if it’s internal.

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In practice, this often means:

• Secondary review of composite membership decisions
• Review of significant cash flow thresholds and discretion determinations
• Approval of new composites and composite definition changes
• Oversight of error identification and correction

This is where governance protects firms from subtle but costly mistakes, especially those that show up during verification and increase complexity and scope of these engagements. In an ideal situation, these internal reviews should catch issues before they become problems.

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As a provider of managed services, Longs Peak helps firms identify performance outliers, accounts that are breaking composite rules, and other data anomalies. This review significantly reduces the risk of erroneous data ending up in your performance and later caught in verification. If you are not able to do this internally, we strongly recommend outsourcing this effort.

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4. Governance Extends to Marketing and Distribution

One area that has been increasingly important is the intersection of GIPS compliance, the SEC marketing rule, and how you manage the distribution of marketing materials.

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Well-governed firms:

• Control who can distribute GIPS Reports and how they are distributed
• Ensure Marketing understands what is and is not an advertisement that meets the requirements of the GIPS standards
• Coordinate GIPS compliance requirements with broader regulatory rules, including the SEC marketing rule
• Have a clear process for tracking distribution

This alignment helps firms avoid inconsistencies between factsheets, pitchbooks, and GIPS Reports—one of the fastest ways to lose credibility with prospects and regulators.

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Some clients prefer not to mention GIPS compliance at all in their marketing (i.e., on their factsheets and pitchbooks) until a client is clearly interested in one of their strategies. Once they meet the definition of a prospect (as outlined in your GIPS standards P&P), it triggers the requirement to send a GIPS Report and they find this smaller list of prospects easier to maintain. For others, having everything in one document including required GIPS compliance information and disclosures is easier to manage than separate documents.

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There is no “right” way to manage this, but in either case, having a clear process for tracking and reporting performance errors is key.

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5. Documentation of Decisions (Not Just Results)

Here’s a subtle but critical point: Good governance for your GIPS compliance program documents decisions, not just outcomes.

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Why was that composite redefined?
Why was this benchmark changed?

Why was this model fee selected?

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Strong governance creates an audit trail that:

• Supports sound reasoning (which aides in the verification process or even regulatory exams later on)
• Reduces key person risk
• Makes future reviews faster and less stressful

This is especially valuable when firms grow, merge, or experience turnover. Clear documentation allows others to step in seamlessly and continue critical functions without disruption. More importantly, it enables independent parties, such as a regulator or your verifier, to understand, assess, and validate how you are calculating and presenting performance that may not be immediately intuitive.

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6. Governance Is Ongoing, Not a One-Time Project

The best-governed firms don’t “set and forget” their GIPS compliance program. They revisit governance when:

• New strategies launch
• Systems or custodians change
• Regulations evolve
• The firm’s structure changes

In other words, governance evolves with the business—because performance reporting doesn’t exist in a vacuum.

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Even for firms that are not regularly launching new strategies, changing systems or structure, an annual review of your GIPS compliance program and governance framework is critical. This review helps confirm that practices have remained consistent, while also providing an opportunity to reflect on whether you are satisfied with your verifier, assess whether new regulations require updates, and reconsider how composites are managed or described.

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The best time to do this is at year-end so that if you decide something should be changed, you can do that proactively for the upcoming year, rather than having to fix it retroactively.

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What Good GIPS Compliance Governance Really Buys You

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When GIPS compliance governance is working well, firms experience:

• A structured, intentional process for validation of your performance results
• A framework that supports consistency and transparency over time
• Fewer surprises or last-minute scrambles during verification or regulatory review
• Greater confidence from regulators and verifiers that you are following established policies and procedures
• Lower operational and reputational risk

Most importantly, it creates trust internally and externally. Good GIPS compliance governance isn’t about being perfect. It’s about being intentional.

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Clear ownership. Thoughtful documentation. Real oversight. Those are the firms that don’t just claim compliance, they live it.

In most investment firms, performance calculation is treated like a math problem: get the numbers right, double-check the formulas, and move on. And to be clear—that part matters. A lot.

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But here’s the truth many firms eventually discover: perfectly calculated performance can still be poorly communicated.

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And when that happens, clients don’t gain confidence. Consultants don’t “get” the strategy. Prospects walk away unconvinced. Not because the returns were wrong—but because the story was missing.

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Calculation Is Technical. Communication Is Human.

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Performance calculation is about precision. Performance communication is about understanding.

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The two overlap, but they are not the same skill set.

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You can calculate a composite’s time-weighted return flawlessly, in line with the Global Investment Performance Standards (GIPS®), using best-in-class methodologies. Yet if the only thing your audience walks away with is “we beat the benchmark,” you’ve left most of the value on the table.

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This gap shows up all the time:

• A client sees strong long-term returns but fixates on one bad quarter.
• A consultant compares two managers with similar returns and can’t tell what truly differentiates them.
• A prospect asks, “But how did you generate these results?”—and the answer is a wall of statistics.

The math is necessary. It’s just not sufficient.

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Returns Answer What. Clients Care About Why.

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Returns tell us what happened. Clients want to know why it happened—and whether it’s likely to happen again.

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That’s where communication comes in. Good performance communication connects returns to:

• The investment philosophy
• The decision-making process
• The risks taken (and avoided)
• The type of prospect the strategy is designed for

This is exactly why performance evaluation doesn’t stop at returns in the CFA Institute’s CIPM curriculum. Measurement, attribution, and appraisal are distinct steps fora reason—each adds context that raw performance alone cannot provide. Without that context, returns become just numbers on a page.

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The Role of Standards: Necessary, Not Narrative

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The GIPS Standards exist to ensure performance is fairly represented and fully disclosed. They do an excellent job of standardizing how performance is calculated and what must be presented. But GIPS compliance doesn’t automatically make performance meaningful to the reader.

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A GIPS Report answers questions like:

• What was the annual return of the composite?
• What was the annual return of the composite’s benchmark?
• How volatile was the strategy compared to the benchmark?

It does not answer:

• Why did this strategy struggle in down markets?
• What risks did the manager consciously take?
• How should an allocator think about using this strategy in a broader portfolio?

That’s not a flaw in the standards, it’s a reminder that communication sits on top of compliance, not inside it.

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Risk Statistics: Where Stories Start (or Die)

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One of the most common communication missteps is overloading clients with risk statistics without explaining what they actually mean or how they can be used to assess the active decisions made in your investment process.

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Sharpe ratios, capture ratios, alpha, beta—they’re powerful information. But without interpretation, they’re just numbers.

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For example:

• A downside capture ratio below 100% isn’t impressive on its own.
• It becomes compelling when you explain how intentionally implemented downside protection was achieved and what trade-offs were accepted in strong up-markets.

This is where performance communication turns data into insight—connecting risk statistics back to portfolio construction and decision-making. Too often, managers select statistics because they look good or because they’ve seen them used elsewhere, rather than because they align with their investment process and demonstrate how their active decisions add value. The most effective communicators use risk statistics intentionally, in the context of what they are trying to deliver to the investor.

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We often see firms change the statistics show Your most powerful story may come from when your statistics show you’ve missed the mark. Explaining why and how you are correcting course demonstrates discipline, self-awareness and control.

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Know Your Audience Before You Tell the Story

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Before you dive into risk statistics, every manager should be asking themselves about their audience. This is where performance communication becomes strategic. Who are you actually talking to? The right performance story depends entirely on your target audience.

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Institutional Prospects

Institutional clients and consultants often expect:

• Detailed risk statistics
• Benchmark-relative analysis
• Attribution and metrics that demonstrate consistency
• Clear articulation of where the strategy fits in a portfolio

They want to understand process, discipline, and risk control. Performance data must be presented with precision and context –grounded in methodology, repeatability and portfolio role. Often, GIPS compliance is a must. Speaking their language builds credibility and demonstrates that you respect the rigor of their decision-making process. It shows that you understand how they evaluate managers and that you are prepared to stand behind your process.

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Retail or High-Net-Worth Individuals

Many individual investors don’t care about alpha or capture ratios in isolation. What they really want to know is:

• Will this help me retire comfortably?
• Can I afford that second home?
• How confident should I feel during market downturns?

For this audience, the same performance data must be framed differently—around goals, outcomes, and peace of mind. Sharing how you track and report on these goals in your communication goes a long way in building trust. It signals that you are committed to their goals and will hold yourself accountable to them.  It reassures them that you are not just managing money, you’re protecting the lifestyle they are building.

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Keep in mind that cultural differences also shape expectations. For example, US-based investors are primarily results oriented, while investors in Japan often expect deeper transparency into the process and inputs, wanting to understand and validate how those results were achieved.

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Same Numbers. Different Story.

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The mistake many firms make is assuming one performance narrative works for everyone. It doesn’t. Effective communication adapts:

• The statistics you emphasize
• The language you use
• The level of detail you provide
• The context you wrap around the results

The goal isn’t to simplify the truth, it’s to translate it to ensure it resonates with the person on the other side of the table.

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The Best Performance Reports Tell a Coherent Story

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Strong performance communication does three things well:

1. It sets expectations
   Before showing numbers, it reminds the reader what the strategy is     designed to do—and just as importantly, what it’s not designed to     do.
2. It     explains outcomes
       Attribution, risk metrics, and market context are used selectively to     explain results, not overwhelm the reader.
3. It reinforces discipline
   Good communication shows consistency between philosophy, process, and performance—especially during periods of underperformance.

This doesn’t mean dumbing anything down. It means respecting the audience enough to guide them through the data.

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Calculation Builds Credibility. Communication Builds Confidence.

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Performance calculation earns you a seat at the table.
Performance communication earns trust.

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Firms that master both don’t just report results—they help clients understand them, evaluate them, and believe in them.

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In an industry where numbers are everywhere, clarity is often the true differentiator.

Key Takeaways from the 29th Annual GIPS® Standards Conference in Phoenix

The 29th Annual Global Investment Performance Standards (GIPS®) Conference was held November 11–12, 2025, at the Sheraton Grand at Wild Horse Pass in Phoenix, Arizona—a beautiful desert resort and an ideal setting for two days of discussions on performance reporting, regulatory expectations, and practical implementation challenges. With no updates released to the GIPS standards this year, much of the content focused on application, interpretation, and the broader reporting and regulatory environment that surrounds the standards.

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One of the few topics directly tied to GIPS compliance with a near-term impact relates to OCIO portfolios. Beginning with performance presentations that include periods through December 31, 2025, GIPS compliant firms with OCIO composites must present performance following a newly prescribed, standardized format. We published a high-level overview of these requirements previously.

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The conference also covered related topics such as the SEC Marketing Rule, private fund reporting expectations, SEC exam trends, ethical challenges, and methodology consistency. Below are the themes and observations most relevant for firms today.

Are Changes Coming to the GIPS Standards in 2030?

Speakers emphasized that while no new GIPS standards updates were introduced this year, expectations for consistent, well-documented implementation continue to rise. Many attendee questions highlighted that challenges often stem more from inconsistent application or interpretation than from unclear requirements.

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Several audience members also asked whether a “GIPS 2030” rewrite might be coming, similar to the major updates in 2010 and 2020. The CFA Institute and GIPS Technical Committee noted that:

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    ·   No new version of the standards is currently in development,

     ·   A long-term review cycle is expected in the coming years, and

     ·   A future update is possible later this decade as the committee evaluates whether changes are warranted.

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For now, the standards remain stable—giving firms a window to refine methodologies, tighten policies, and align practices across teams.

Performance Methodology Under the SEC Marketing Rule

The Marketing Rule featured prominently again this year, and presenters emphasized a familiar theme: firms must apply performance methodologies consistently when private fund results appear in advertising materials.

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Importantly, these expectations do not come from prescriptive formulas within the rule. They stem from:

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1.     The “fair and balanced” requirement,

2.     The Adopting Release, and

3.     SEC exam findings that view inconsistent methodology as potentially misleading.

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Common issues raised included: presenting investment-level gross IRR alongside fund-level net IRR without explanation, treating subscription line financing differently in gross vs. net IRR, and inconsistently switching methodology across decks, funds, or periods.

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To help firms void these pitfalls, speakers highlighted several expectations:

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     ·   Clearly identify whether IRR is calculated at the investment level or fund level.

     ·   Use the same level of calculation for both gross and net IRR unless a clear, disclosed rationale exists.

     ·   Apply subscription line impacts consistently across both gross and net.

     ·   Label fund-level gross IRR clearly, if used(including gross returns is optional).

     ·   Ensure net IRR reflects all fees, expenses, and carried interest.

     ·   Disclose any intentional methodological differences clearly and prominently.

     ·   Document methodology choices in policies and apply them consistently across funds.

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This remains one of the most frequently cited issues in SEC exam findings for private fund advisers. In short: the SEC does not mandate a specific methodology, but it does expect consistent, well-supported approaches that avoid misleading impressions.

Evolving Expectations in Private Fund Client Reporting

Although no new regulatory requirements were announced, presenters made it clear that limited partners expect more transparency than ever before. The session included an overview of the updated ILPA reporting template along with additional information related to its implementation. Themes included:
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     ·   Clearer disclosure of fees and expenses,

     ·   Standardized IRR and MOIC reporting,

     ·   More detail around subscription line usage,

     ·   Attribution and dispersion that are easy to interpret, and

     ·   Alignment with ILPA reporting practices.

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These are not formal requirements, but it’s clear the industry is moving toward more standardized and transparent reporting.

Practical Insights from SEC Exams—Including How Firms Should Approach Deficiency Letters

A recurring theme across the SEC exam sessions was the need for stronger alignment between what firms say in their policies and what they do in practice. Trends included:

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     ·   More detailed reviews of fee and expense calculations, especially for private funds,

     ·   Larger sample requests for Marketing Rule materials,

     ·   Increased emphasis on substantiation of all claims, and

     ·   Close comparison of written procedures to actual workflows.

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A particularly helpful part of the discussion focused on how firms should approach responding to SEC deficiency letters—something many advisers encounter at some point.

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Christopher Mulligan, Partner at Weil, Gotshal & Manges LLP, offered a framework that resonated with many attendees. He explained that while the deficiency letter is addressed to the firm by the exam staff, the exam staff is not the primary audience when drafting the response.

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The correct priority order is:

1. The SEC Enforcement Division

Enforcement should be able to read your response and quickly understand that: you fully grasp the issue, you have corrected or are correcting it, and nothing in the finding merits escalation.

Your first objective is to eliminate any concern that the issue rises to an enforcement matter.

2. Prospective Clients

Many allocators now request historical deficiency letters and responses during due diligence. The way the response is written—its tone, clarity, and thoroughness—can meaningfully influence how a firm is perceived.

A well-written response shows strong controls and a culture that takes compliance seriously.

3. The SEC Exam Staff

Although examiners issued the letter, they are the third audience. Their primary interest is acknowledgment and a clear explanation of the remediation steps.

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Mulligan emphasized that firms often default to writing the response as if exam staff were the only audience. Reframing the response to keep the first two audiences in mind—enforcement and prospective clients—helps ensure the tone, clarity, and level of detail are appropriate and reduces both regulatory and reputational risk.

Final Thoughts

With no changes to the GIPS standards introduced this year, the 2025 conference in Phoenix served as a reminder that the real challenges involve consistency, documentation, and communication. OCIO providers in particular should be preparing for the upcoming effective date, and private fund managers continue to face rising expectations around transparent, well-supported performance reporting.

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Across all sessions, a common theme emerged: clear methodology and strong internal processes are becoming just as important as the performance results themselves.

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This is exactly where Longs Peak focuses its work. Our team specializes in helping firms document and implement practical, well-controlled investment performance frameworks—from IRR methodologies and composite construction to Marketing Rule compliance, fee and expense controls, and preparing for GIPS standards verification. We take the technical complexity and turn it into clear, operational processes that withstand both client due diligence and regulatory scrutiny.

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If you’d like to discuss how we can help strengthen your performance reporting or compliance program, we’d be happy to talk. Contact us.

From Compliance to Growth: How the GIPS® Standards Help Investment Firms Unlock New Opportunities

For many investment managers, the first barrier to growth isn’t performance—it’s proof.
When platforms, consultants, and institutional investors evaluate new strategies, they’re not just asking how well you perform; they’re asking how you measure and present those results.

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That’s where the GIPS® standards come in.

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More and more investment platforms and allocators now require firms to comply with the GIPS standards before they’ll even review a strategy. For firms seeking to expand their reach—whether through model delivery, SMAs, or institutional channels—GIPS compliance has become a passport to opportunity.

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The Opportunity Behind Compliance

Becoming compliant with the GIPS standards is about more than checking a box. It’s about building credibility and transparency in a way that resonates with today’s due diligence standards.

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When a firm claims compliance with the GIPS standards, it demonstrates that its performance is calculated and presented according to globally recognized ethical principles—ensuring full disclosure and fair representation. This helps level the playing field for managers of all sizes, giving them a chance to compete where it matters most: on results and consistency.

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In short, GIPS compliance doesn’t just make your reporting more accurate—it makes your firm more credible and discoverable.

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Turning Complexity Into Clarity

While the benefits are clear, the process can feel overwhelming. Between defining the firm, creating composites, documenting policies and procedures, and maintaining data accuracy—many teams struggle to find the time or expertise to get it right.

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That’s where Longs Peak comes in.

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We specialize in simplifying the process. Our team helps firms navigate every step—from initial readiness and composite construction to quarterly maintenance and ongoing training—so that compliance becomes a seamless part of operations rather than a burden on them.

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As one of our clients put it, “Longs Peak helps us navigate GIPS compliance with ease. They spare us from the time and effort needed to interpret what the requirements mean and let us focus on implementation.”

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Real Firms, Real Impact

We’ve seen firsthand how GIPS compliance can transform firms’ growth trajectories.

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Take Genter Capital Management, for example. As David Klatt, CFA and his team prepared to expand into model delivery platforms, managing composites in accordance with the GIPS standards became increasingly complex. With Longs Peak’s customized composite maintenance system in place, Genter gained the confidence and operational efficiency they needed to access new platforms and relationships—many of which require firms to be GIPS compliant as a baseline.

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Or consider Integris Wealth Management. After years of wanting to formalize their composite reporting, they finally made it happen with our support. As Jenna Reynolds from Integris shared:

“When I joined Integris over seven years ago, we knew we wanted to build out our composite reporting, but the complexity of the process felt overwhelming. Since partnering with Longs Peak in 2022, they’ve been instrumental in driving the project to completion. Our ongoing collaboration continues to be both productive and enjoyable.”

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These are just two examples of what happens when compliance meets clarity—firms gain time back, confidence grows, and new business doors open.

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Why It Matters—Compliance as a Strategic Advantage

At Longs Peak, we believe compliance with the GIPS standards isn’t a cost—it’s an investment.

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By aligning your firm’s performance reporting with the GIPS standards, you gain:

• Access to platforms and institutions that require GIPS compliant firms.
• Credibility and trust in an increasingly competitive landscape.
• Operational efficiency through consistent data and documented processes.
• Scalability to support multiple strategies and distribution channels.

Simply put: compliance fuels confidence—and confidence drives growth.

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Simplifying the Complex

At Longs Peak, we’ve helped over 250 firms and asset owners transform how they calculate, present, and communicate their investment performance. Our goal is simple: make compliance with the GIPS standards practical, transparent, and aligned with your firm’s growth goals.

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Because when compliance works efficiently, it doesn’t slow your business down—it helps it reach further.

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Ready to turn compliance into a growth advantage?

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Performance reporting has two common pitfalls: it’s backward-looking, and it often stops at raw returns. A quarterly report might show whether a portfolio beat its benchmark, but it doesn’t always show why or whether the results are sustainable. By layering in risk-adjusted performance measures—and using them in a structured feedback loop—firms can move beyond reporting history to actively improving the future.

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Why a Feedback Loop Matters

Clients, boards, and oversight committees want more than historical returns. They want to know whether:

·        performance was delivered consistently,

·        risk was managed responsibly, and

·        the process driving results is repeatable.

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A feedback loop helps firms:

·        define expectations up front instead of rationalizing results after the fact,

·        monitor performance relative to objective appraisal measures,

·        diagnose whether results are consistent with the manager’s stated mandate, and

·        adjust course in real time so tomorrow’s outcomes improve.

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With the right discipline, performance reporting shifts from a record of the past toa tool for shaping the future.

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Step 1: Define the Measures in Advance

A useful feedback loop begins with clear definitions of success. Just as businesses set key performance indicators (KPIs) before evaluating outcomes, portfolio managers should define their performance and risk statistics in advance, along with expectations for how those measures should look if the strategy is working as intended.

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One way to make this tangible is by creating a Performance Scorecard. The scorecard sets out pre-determined goals with specific targets for the chosen measures. At the end of the performance period, the manager completes the scorecard by comparing actual outcomes against those targets. This creates a clear, documented record of where the strategy succeeded and where it fell short.

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Some of the most effective appraisal measures to include on a scorecard are:

·        Jensen’s Alpha: Did the manager generate returns beyond what would be expected for the level of market risk (beta) taken?

·        Sharpe Ratio: Were returns earned efficiently relative to volatility?

·        Max Drawdown: If the strategy claims downside protection, did the worst loss align with that promise?

·        Up- and Down-Market Capture Ratios: Did the strategy deliver the participation levels in up and down markets that were expected?

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By setting these expectations up front in a scorecard, firms create a benchmark for accountability. After the performance period, results can be compared to those preset goals, and any shortfalls can be dissected to understand why they occurred.

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Step 2: Create Accountability Through Reflection

This structured comparison between expected vs. actual results is the heart of the feedback loop.

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If the Sharpe Ratio is lower than expected, was excess risk taken unintentionally? If the Downside Capture Ratio is higher than promised, did the strategy really offer the protection it claimed?

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The key is not just to measure, but to reflect. Managers should ask:

·        Were deviations intentional or unintentional?

·        Were they the result of security selection, risk underestimation, or process drift?

·        Do changes need to be made to avoid repeating the same shortfall next period?

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The scorecard provides a simple framework for this reflection, turning appraisal statistics into active learning tools rather than static reporting figures.

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Step 3: Monitor, Diagnose, Adjust

With preset measures in place, the loop becomes an ongoing process:

1.     Review results against the expectations that were defined in advance.

2.     Flag deviations using alpha, Sharpe, drawdown, and capture ratios.

3.     Discuss root causes—intentional, structural, or concerning.

4.     Refine the investment process to avoid repeating the same shortcomings.

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This approach ensures that managers don’t just record results—they use them to refine their craft. The scorecard becomes the record of this process, creating continuity over multiple periods.

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Step 4: Apply the Feedback Loop Broadly

When applied consistently, appraisal measures—and the scorecards built around them—support more than internal evaluation. They can be used for:

·        Manager oversight: Boards and trustees see whether results matched stated goals.

·        Incentive design: Bonus structures tied to pre-defined risk-adjusted outcomes.

·        Governance and compliance: Demonstrating accountability with clear, documented processes.

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How Longs Peak Can Help

At Longs Peak, we help firms move beyond static reporting by building feedback loops rooted in performance appraisal. We:

·        Define meaningful performance and risk measures tailored to each strategy.

·        Help managers set pre-determined expectations for those measures and build them into a scorecard.

·        Calculate and interpret statistics such as alpha, Sharpe, drawdowns, and capture ratios.

·        Facilitate reflection sessions so results are compared to goals and lessons are turned into process improvements.

·        Provide governance support to ensure documentation and accountability.

The result is a sustainable process that keeps strategies aligned, disciplined, and credible.

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Closing Thought

Markets will always fluctuate. But firms that treat performance as a feedback loop—nota static report—build resilience, discipline, and trust.

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A well-structured scorecard ensures that performance data isn’t just about yesterday’s story. When used as feedback, it becomes a roadmap for tomorrow.

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Need help creating a Performance Scorecard? Reach out if you want us to help you create more accountability today!

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When you're responsible for overseeing the performance of an endowment or public pension fund, one of the most critical tools at your disposal is the benchmark. But not just any benchmark—a meaningful one, designed with intention and aligned with your Investment Policy Statement(IPS). Benchmarks aren’t just numbers to report alongside returns; they represent the performance your total fund should have delivered if your strategic targets were passively implemented.

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And yet, many asset owners still find themselves working with benchmarks that don’t quite match their objectives—either too generic, too simplified, or misaligned with how the total fund is structured. Let’s walkthrough how to build more effective benchmarks that reflect your IPS and support better performance oversight.

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Start with the Policy: Your IPS Should Guide Benchmark Construction

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Your IPS is more than a governance document—it is the road map that sets strategic asset allocation targets for the fund. Whether you're allocating 50% to public equity or 15% to private equity, each target signals an intentional risk/return decision. Your benchmark should be built to evaluate how well each segment of the total fund performed.

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The key is to assign a benchmark to each asset class and sub-asset class listed in your IPS. This allows for layered performance analysis—at the individual sub-asset class level (such as large cap public equity), at the broader asset class level (like total public equity), and ultimately rolled up at the Total Fund level. When benchmarks reflect the same weights and structure as the strategic targets in your IPS, you can assess how tactical shifts in weights and active management within each segment are adding or detracting value.

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Use Trusted Public Indexes for Liquid Assets

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For traditional, liquid assets—like public equities and fixed income—benchmarking is straightforward. Widely recognized indexes like the S&P 500, MSCI ACWI, or Bloomberg U.S. Aggregate Bond Index are generally appropriate and provide a reasonable passive alternative against which to measure active strategies managed using a similar pool of investments as the index.

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These benchmarks are also calculated using time-weighted returns (TWR), which strip out the impact of cash flows—ideal for evaluating manager skill. When each component of your total fund has a TWR-based benchmark, they can all be rolled up into a total fund benchmark with consistency and clarity.

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Think Beyond the Index for Private Markets

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Where benchmarking gets tricky is in illiquid or asset classes like private equity, real estate, or private credit. These don’t have public market indexes since they are private market investments, so you need a proxy that still supports a fair evaluation.

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Some organizations use a peer group as the benchmark, but another approach is to use an annualized public market index plus a premium. For example, you might use the 7-year annualized return of the Russell 2000(lagged by 3 months) plus a 3% premium to account for illiquidity and risk.

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Using the 7-year average rather than the current period return removes the public market volatility for the period that may not be as relevant for the private market comparison. The 3-month lag is used if your private asset valuations are updated when received rather than posted back to the valuation date. The purpose of the 3% premium (or whatever you decide is appropriate) is to account for the excess return you expect to receive from private investments above public markets to make the liquidity risk worthwhile.

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By building in this hurdle, you create a reasonable, transparent benchmark that enables your board to ask: Is our private markets portfolio delivering enough excess return to justify the added risk and reduced liquidity?

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Roll It All Up: Aggregated Benchmarks for Total Fund Oversight

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Once you have individual benchmarks for each segment of the total fund, the next step is to aggregate them—using the strategic asset allocation weights from your IPS—to form a custom blended total fund benchmark.

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This approach provides several advantages:

• You can evaluate performance at both the micro (asset class) and macro (total fund) level.
• You gain insight into where active management is adding value—and where it isn’t.
• You ensure alignment between your strategic policy decisions and how performance is being measured.

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For example, if your IPS targets 50% to public equities split among large-, mid-, and small-cap stocks, you can create a blended equity benchmark that reflects those sub-asset class allocations, and then roll it up into your total fund benchmark. Rebalancing of the blends should match there balancing frequency of the total fund.

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What If There's No Market Benchmark?

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In some cases, especially for highly customized or opportunistic strategies like hedge funds, there simply may not be a meaningful market index to use as a benchmark. In these cases, it is important to consider what hurdle would indicate success for this segment of the total fund. Examples of what some asset owners use include:

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• CPI + Premium – a simple inflation-based hurdle
• Absolute return targets – such as a flat 7% annually‍
• Total Fund return for the asset class – not helpful for evaluating the performance of this segment, but still useful for aggregation to create the total fund benchmark

While these aren’t perfect, they still serve an important function: they allow performance to be rolled into a total fund benchmark, even if the asset class itself is difficult to benchmark directly.

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The Bottom Line: Better Benchmarks, Better Oversight

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For public pension boards and endowment committees, benchmarks are essential for effective fiduciary oversight. A well-designed benchmark framework:

• Reflects your strategic intent
• Provides fair, consistent measurement of manager performance
• Supports clear communication with stakeholders

At Longs Peak Advisory Services, we’ve worked with asset owners around the globe to develop custom benchmarking frameworks that align with their policies and support meaningful performance evaluation. If you’re unsure whether your current benchmarks are doing your IPS justice, we’re hereto help you refine them.

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Want to dig deeper? Let’s talk about how to tailor a benchmark framework that’s right for your total fund—and your fiduciary responsibilities. Reach out to us today.

For asset owners and investment firms managing private equity, real estate, or other illiquid assets, one of the most persistent challenges in performance reporting is determining the right approach to valuation timing. Accurate performance results are essential, but delays in receiving valuations can create friction with timely reporting goals. How can firms strike the right balance?

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At Longs Peak Advisory Services, we’ve worked with hundreds of investment firms and asset owners globally to help them present meaningful, transparent performance results. When it comes to illiquid investments, the trade-offs and decisions surrounding valuation timing can have a significant impact—not just on performance accuracy, but also on how trustworthy and comparable the results appear to stakeholders.

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Why Valuation Timing Matters

Illiquid investments are inherently different from their liquid counterparts. While publicly traded securities can be valued in real-time with market prices, private equity and real estate investments often report with a delay—sometimes months after quarter-end.

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This delay creates a reporting dilemma: Should firms wait for final valuations to ensure accurate performance, or should they push ahead with estimates or lagged valuations to meet internal or external deadlines?

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It’s a familiar struggle for investment teams and performance professionals. On one hand, accuracy supports sound decision-making and stakeholder trust. On the other, reporting delays can hinder communication with boards, consultants, and beneficiaries—particularly for asset owners like endowments and public pension plans that follow strict reporting cycles.

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Common Approaches to Delayed Valuations

For strategies involving private equity, real estate, or other illiquid holdings, receiving valuations weeks—or even months—after quarter-end is the norm rather than the exception. To deal with this lag, investment organizations typically adopt one of two approaches to incorporate valuations into performance reporting: backdating valuations or lagging valuations. Each has benefits and drawbacks, and the choice between them often comes down to a trade-off between accuracy and timeliness.

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1. Backdating Valuations

In the backdating approach, once a valuation is received—say, a March 31 valuation that arrives in mid-June—it is recorded as of March 31, the actual valuation date. This ensures that performance reports reflect economic activity during the appropriate time period, regardless of when the data became available.

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Pros:

• Accuracy: Provides the most accurate snapshot of asset values and portfolio performance for the period being reported.
• Integrity: Maintains alignment between valuation dates and the underlying activity in the portfolio, which is particularly important for internal analysis or for investment committees wanting to evaluate manager decisions during specific market environments.

Cons:

• Delayed Reporting: Final performance for the quarter may be delayed by 4–6 weeks or more, depending on how long it takes to receive valuations.
• Stakeholder Frustration: Boards, consultants, and beneficiaries may grow  frustrated if they cannot access updated reports in a timely manner, especially if performance data is tied to compensation decisions, audit     deadlines, or public disclosures.

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When It's Useful:

• When transparency and accuracy are prioritized over speed—e.g., in annual audited performance reports or regulatory filings.
• For internal purposes where precise attribution and alignment with economic events are critical, such as evaluating decision-making during periods of market volatility.

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2. Lagged Valuations

With the lagged approach, firms recognize delayed valuations in the subsequent reporting period. Using the same example: if the March 31valuation is received in June, it is instead recorded as of June 30. In this case, the performance effect of the Q1 activity is pushed into Q2’sreporting.

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Pros:

• Faster Reporting: Performance reports can be completed shortly after quarter-end, meeting board, stakeholder, and regulatory timelines.
• Operational Efficiency: Teams aren’t held up by a few delayed valuations, allowing them to close the books and move on to other tasks.

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Cons:

• Reduced Accuracy: Performance reported for Q2 includes valuation changes that actually occurred in Q1, misaligning performance with the period in which it was earned.
• Misinterpretation Risk: If users are unaware of the lag, they may misattribute results to the wrong quarter, leading to flawed conclusions about manager skill or market behavior.

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When It's Useful:

• When quarterly reporting deadlines must be met (e.g., trustee meetings, consultant updates).
• In environments where consistency and speed are prioritized, and the lag can be adequately disclosed and understood by users.

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Choosing the Right Approach (and Sticking with It)

Both approaches are acceptable from a compliance and reporting perspective. However, the key lies in consistency.

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Once an organization adopts an approach—whether back dating or lagging—it should be applied across all periods, portfolios, and asset classes. Inconsistent application opens the door to performance manipulation(or the appearance of it), where results might look better simply because a valuation was timed differently.

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This kind of inconsistency can erode trust with boards, auditors and other stakeholders. Worse, it could raise red flags in a regulatory review or third-party verification.

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Disclose, Disclose, Disclose

Regardless of the method you use, full transparency in reporting is essential. If you’re lagging valuations by a quarter, clearly state that in your disclosures. If you change methodologies at any point—perhaps transitioning from lagged to backdated—explain when and why that change occurred.

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Clear disclosures help users of your reports—whether board members, beneficiaries, auditors, or consultants—understand how performance was calculated. It allows them to assess the results in context and make informed decisions based on the data.

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Aligning Benchmarks with Valuation Timing

One important detail that’s often overlooked: your benchmark data should follow the same valuation timing as your portfolio.

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If your private equity or real estate portfolio is lagged by a quarter, but your benchmark is not, your performance comparison becomes flawed. The timing mismatch can mislead stakeholders into believing the strategy outperformed or underperformed, simply due to misaligned reporting periods.

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To ensure a fair and meaningful comparison, always apply your valuation timing method consistently across both your portfolio and benchmark data.

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Building Trust Through Transparency

Valuation timing is a technical, often behind-the-scenes issue—but it plays a crucial role in how your investment results are perceived. Boards and stakeholders rely on accurate, timely, and understandable performance reporting to make decisions that impact beneficiaries, employees, and communities.

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By taking the time to document your valuation policy, apply it consistently, and disclose it clearly, you are reinforcing your organization’s commitment to integrity and transparency. And in a world where scrutiny of investment performance is only increasing, that commitment can be just as valuable as the numbers themselves.

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Need help defining your valuation timing policy or aligning performance reporting practices with industry standards?

‍Longs Peak Advisory Services specializes in helping investment firms and asset owners simplify their performance processes, maintain compliance, and build trust through transparent reporting. Contact us to learn how we can support your team.

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The Performance Measurement, Attribution & Risk (PMAR) Conference is always a highlight for investment performance professionals—and this year’s event did not disappoint. With a packed agenda spanning everything from economic uncertainty and automation to evolving training needs and private market complexities, PMAR 2025 gave attendees plenty to think about.

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Here are some of our key takeaways from this year’s event:

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Women in Performance Measurement (WiPM)

Although not officially a part of PMAR, WiPM often schedules its annual in-person gathering during the same week to take advantage of the broader industry presence at the event. This year’s in-person gathering, united female professionals from across the country for a full day of connection, learning, and mentorship. The agenda struck a thoughtful balance between professional development and personal connection, with standout sessions on AI and machine learning, resume building, and insights from the WiPM mentoring program. A consistent favorite among attendees is the interactive format—discussions are engaging, and the support among members is truly energizing. The day concluded with a cocktail reception and dinner, reinforcing the group’s strong sense of community and its ongoing commitment to advancing women in the performance measurement profession.

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If you’re not yet a member and are interested in joining the community, find WiPM here on LinkedIn.

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Uncertainty, Not Risk, is Driving Market Volatility

John Longo, Ph.D., Rutgers Business School kicked off the conference with a deep dive into the global economy, and his message was clear: today’s markets are more uncertain than risky. Tariffs, political volatility, and unconventional strategies—like the idea of purchasing Greenland—are reshaping global trade and investment decisions. His suggestion? Investors may want to look beyond U.S. borders and consider assets like gold or emerging markets as a hedge.

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Longo also highlighted the looming national debt problem and inflationary effects of protectionist policies. For performance professionals, the implication is clear: macro-level policy choices are creating noise that can obscure traditional risk metrics. Understanding the difference between risk and uncertainty is more important than ever.

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The Future of Training: Customized, Continuous, and Collaborative

In the “Developing Staff for Success” session, Frances Barney, CFA (former head of investment performance and risk analysis for BNY Mellon) and our very own Jocelyn Gilligan, CFA, CIPM explored the evolving nature of training in our field. The key message: cookie-cutter training doesn't cut it anymore. With increasing regulatory complexity and rapidly advancing technology, firms must invest in flexible, personalized learning programs.

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Whether it's improving communication skills, building tech proficiency, or embedding a culture of curiosity, the session emphasized that training must be more than a check-the-box activity. Ongoing mentorship, cross-training, and embracing neurodiversity in learning styles are all part of building high-performing, engaged teams.

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AI is Here—But It Needs a Human Co-Pilot

Several sessions explored the growing role of AI and automation in performance and reporting. The consensus? AI holds immense promise, but without strong data governance and human oversight, it’s not a silver bullet. From hallucinations in generative models to the ethical challenges of data usage, AI introduces new risks even as it streamlines workflows.

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Use cases presented ranged from anomaly detection and report generation to client communication enhancements and predictive exception handling. But again and again, speakers emphasized: AI should augment, not replace, human expertise.

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Private Markets Require Purpose-Built Tools

Private equity, private credit, real estate, and hedge funds remain among the trickiest asset classes to measure. Whether debating IRR vs. TWR, handling data lags, or selecting appropriate benchmarks, this year's sessions highlighted just how much nuance is involved in getting private market reporting right.

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One particularly compelling idea: using replicating portfolios of public assets to assess the risk and performance of illiquid investments. This approach offers more transparency and a better sense of underlying exposures, especially in the absence of timely valuations.

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Shorting and Leverage Complicate Performance Attribution

Calculating performance in long/short portfolios isn’t straightforward—and using absolute values can create misleading results. A session on this topic broke down the mechanics of short selling and explained why contribution-based return attribution is essential for accurate reporting.

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The key insight: portfolio-level returns can fall outside the range of individual asset returns, especially in leveraged portfolios. Understanding the directional nature of each position is crucial for both internal attribution and external communication.

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The SEC is Watching—Are You Ready?

Compliance was another hot topic, especially in light of recent enforcement actions under the SEC Marketing Rule. From misuse of hypothetical performance to sloppy use of testimonials, the panelists shared hard-earned lessons and emphasized the importance of documentation. This panel was moderated by Longs Peak’s Matt Deatherage, CFA, CIPM and included Lance Dial, of K&L Gates along with Thayne Gould from Vigilant.

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FAQs have helped clarify gray areas (especially around extracted performance and proximity of net vs. gross returns), but more guidance is expected—particularly on model fees and performance portability. If you're not already documenting every performance claim, now is the time to start.

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“Phantom Alpha” Is Real—And Preventable

David Spaulding of TSG, closed the conference with a deep dive into benchmark construction and the potential for “phantom alpha.” Even small differences in rebalancing frequency between portfolios and their benchmarks can create misleading outperformance. His recommendation? Either sync your rebalancing schedules or clearly disclose the differences.

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This session served as a great reminder that even small implementation details can significantly impact reported performance—and that transparency is essential to maintaining trust.

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Final Thoughts

From automation to attribution, PMAR 2025 showcased the depth and complexity of our field. If there’s one overarching takeaway, it’s that while tools and techniques continue to evolve, the core principles—transparency, accuracy, and accountability—remain as important a sever.

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Did you attend PMAR this year? We’d love to hear your biggest takeaways. Reach out to us at hello@longspeakadvisory.com or drop us a note on LinkedIn!