June 25, 2024

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GIPS Standards Define a Distinctive Investment Strategy

Choosing to invest in a specific asset class or sector requires that a firm adopt a distinct investment strategy. GIPS standards define a distinct investment strategy as one that is separate and apart from the firm’s core investment portfolio. These investments must be managed according to the strategy, and cash must be allocated to them consistently and promptly. In addition, firms must allocate cash to their carveouts on a consistent basis. To comply with the standards, firms should create separate composites for each of their portfolio segments or distinct investment strategies.

The value investing strategy is a good example. In this strategy, investors seek to invest in companies that are undervalued. As a result, when the market corrects itself, they will see a high price. Warren Buffet is a well-known practitioner of this strategy. However, there is a downside to this approach: it requires an investor to avoid selling stocks when the market is down. These stock prices can fall as much as 50%, and individual stocks can drop even more.

In addition to private equity funds, investors can also invest in infrastructure in India. The government of India is a major beneficiary of the NIIF, a collaborative investment platform that invests in domestic infrastructure. The government of India has a vested interest in NIIF and its investments, making it a particularly attractive option for institutional investors. The NIIF funds are professionally managed, and the government’s association with the organization provides benefits. NIIF is managed by professional fund managers and is composed of three funds with distinct investment strategies.