Standard III(D): Performance Presentation

What does Standard III(D) require?

When you communicate investment performance, you must make reasonable efforts to ensure it is fair, accurate and complete . The point is to give clients and prospects credible information and to stop them being misled about your results or your firm’s.

Memorize

• It covers performance measurement as well as presentation. Any practice that would misrepresent a member’s or firm’s record is caught, whether the figures describe single accounts, composites or groups of accounts.
• It covers past and expected performance. Do not state or imply that clients will earn a return that was earned in the past.
• It is not limited to separate accounts. Pooled-fund figures you take responsibility for must be accurate, and an analyst who promotes the success of past recommendations must also be fair, accurate and complete.

Performance communicationfair, accurate and complete

• Avoid Memorize practices that mislead
  • Cherry-picking best accounts or best periods only
  • Dropping terminated accounts survivors-only record
  • Unlabeled simulations model results shown as actual
• Disclose Memorize so the audience is not misled
  • Simulated or model results say so
  • A prior entity's record where and how it was earned
  • Gross, net or after-tax which basis applies
• Method Use it compliance practices
  • GIPS compliance the best method
  • Weighted composites of similar portfolios, not one star account
  • Keep supporting records the data behind each figure

Which practices mislead?

A composite groups similar portfolios so that one weighted figure describes the whole strategy. A record built from the best account, or one that drops terminated accounts , shows only the survivors and overstates what a typical client received. Choosing flattering periods does the same job across time.

Simulated results (model or back-tested returns) are not actual client returns. They may be shown when clearly labeled as simulated and explained. A prior-firm record may be shown if it is clearly identified as the record of a prior entity, and fair, accurate and complete.

A brief presentation , such as a headline return in a talk, is acceptable, but the detailed information behind it must be available on request. Best practice adds a note that the information is limited.

What is the recommended method?

For a manager showing the performance of assets under management, complying with the GIPS standards is the best way to meet III(D), and members should encourage their firms to comply. The GIPS reading itself is in the 2026 curriculum only (see the GIPS lessons, 2026 curriculum). Without GIPS, you can still comply by:

• considering the knowledge and sophistication of the audience;
• presenting the weighted composite of similar portfolios, not a single representative account;
• including terminated accounts, with a clear note of when they ended;
• disclosing what explains the figures: simulated results, a prior entity’s record, and whether returns are gross of fees, net of fees or after tax;
• keeping the data and records behind the numbers.

Where do the lines fall?

Situation	Verdict
A manager advertises the return of her best account as “our equity performance”	Violation
Back-tested returns are shown without a hypothetical label	Violation
A manager starting a new firm shows his old record, stating clearly where and with which team it was earned	Acceptable if fair, accurate and not misleading
A composite leaves out three accounts that closed after poor results	Violation
A pitch shows five-year returns and says the full composite presentation is available on request	Acceptable

Go deeper Why composites stop cherry-picking

If a firm may choose which accounts to show, it will show the best. A composite fixes the rule in advance: every discretionary account following a strategy goes in, including the ones that later close, and the return is a weighted figure for the group. The GIPS standards formalize that discipline, which is why III(D) points to them. How composites are built was part of the 2026 GIPS reading, which the 2027 Level I outline does not include.

Go deeper Gross and net returns

Gross returns exclude management fees and sometimes trading costs, so they always look better than net returns. Neither is wrong, but an unlabeled figure can mislead a client who assumes it is what they would keep. State the basis next to the number, and show net returns where the audience will judge value after fees.