GIPS STATEMENT ON PRIVATE EQUITY

The CFA Institute created and administers a series of fund calculation and reporting standards that are utilized throughout the asset management industry across multiple asset classes and fund types. These standards are collectively referred to as Global Investment Performance Standards (GIPS).1 GIPS has produced a series of guidance statements on standards interpretations and guidance statements regarding different aspects of fund reporting and transparency. Relevant to our present discussion, these guidance statements include a Guidance Statement on Real Estate and Guidance Statement on Private Equity.

The GIPS standards are designed to provide a fund's prospective clients with the information needed to evaluate a fund's performance figures. The GIPS guidance with regard to private equity fund valuation outlines that the notions of fair value that are utilized in the GIPS provisions as applicable toward private equity are similar to the concepts of fair value utilized in international accounting standards.