Global Investment Performance Standards will open door to international capital flows - Punch Newspapers

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19th December 2022The adoption of Global Investment Performance Standards , including mark-to-market accounting of traded securities, will enable Nigerian mutual funds to feature on international fund comparison sites. Supported by reliable and globally comparable performance data, Nigerian mutual funds will attract global investment, positioning mutual funds as the country’s default destination for discretionary savings.

Especially in the wake of the 2008 global financial crisis, regulators around the world have applied much more stringent compliance standards to the global mutual fund industry. To remain active in global capital markets mutual funds, asset managers and advisors have been forced to keep up with global best practice. This always means adopting GIPS.

“Our own Securities and Exchange Commission rules clearly favour mark-to-market fund evaluation,” observes Czartoryski. While implementation is currently patchy it is likely only a matter of time before either the regulator, market forces, or a combination of the two ensure broad-based compliance.

Fund managers using the amortised accounting method will report steadily increasing values to the fund’s unit holders. Fund managers following the mark-to-market valuation method will report fluctuating values to the funds’ unit holders, though the cash flows provided by the underlying securities are no different.

 

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