Peer Intelligence | Fall 2022

By Tom Scheilbelhut

Having benchmarked institutional investors for almost thirty years, one question is consistently asked by funds of all shapes and sizes.... how do I know the comparisons are apples-to-apples? How can I be confident that the data is truly comparable? Is my fund being penalized for being more diligent in how we provide data? Unlike in many other fields, such as accounting and retail asset management, there is no clear global standard.

In an era of increased reporting complexity for institutional investors, CEM Benchmarking has sought to establish a new gold standard for institutional investment reporting and disclosure. Meet GRSii, or more formally, the Global Reporting Standard for Institutional Investors.

Over the past decade, regional reporting standards have proliferated, and institutional investors have increasingly been mired in complexity in areas where reporting is vague or varies markedly between peer geographies. How do we measure the total investment cost of private equity? Should fees be reported net or gross of offsets? Should fees netted from returns in commingled asset pools be reported?

Institutional Investors often look to CEM for these answers and for the tactical solutions that they know will drive industry change. And sometimes, striving towards clarity and standardization for all is the way forward.

GRSii is a brand-new initiative designed to establish a single global reporting standard in the realm of ever-expanding regional standards. It is built upon a detailed review of the various regional standards, ironing out differences, closing gaps, extending to adjacencies, and ensuring global relevance. GRSii strives to provide clear, unifying guidelines for the reporting of fund performance, including costs.

Coming in 2023, GRSii will first seek to streamline the gaps in the global reporting of investment costs with the goal of improving the quality of a fund’s public and private disclosures and market transparency. It will enable more comparable peer-to-peer analyses. The standard will also tackle the complexity behind the timeliness of reporting, balancing the value of “good-reporting-soon" vs. “great-reporting-later."

GRSii is not only meant to expand on existing regional cost reporting standards but also leaves room for exploring future scenarios, such as how to report environmental, social, and corporate governance impacts. Ultimately, GRSii encourages institutional investors to adopt a universal set of standards, demonstrates value for money, and provides insights to make more meaningful comparisons.

We are in the process of creating a self-administered rubric, by which institutional investors will be able to assess the quality of their investment cost disclosures, public and private, against industry best practices. Our aspiration is that institutional investors, using the rubric, will be able to take a measured approach in participating.

GRSii was developed in partnership with seven institutional executives who also comprise the Board for the initiative. These leaders contribute invaluable thought leadership and support GRSii’s iterative, co-creation framework.

We are pleased to introduce the following Board members who bring varying opinions from their respective global geographies:

• Christopher Ailman, CIO, California State Teachers’ Retirement System  

• Trent Brandie, Principal, Investment Reporting & Insights, AustralianSuper  

• Doug Clark, Head of Investment Research and Solutions, BT Pension Scheme  

• Julie Decaux, Senior Director FP&A, Public Sector Pension Investment Board  

• Natalie Gabba, Senior Director, Financial Performance and Administration, La Caisse de Dépôt et Placement du Québec  

• Frits Meerdink, Fund Management Expert, PGGM  

• Frank Toebosch, Expert of Internal Control, ABP  

Over the coming years, CEM will continue to work with Board partners to discuss thoughtful ideas, questions, and future improvements for GRSii. We would love your participation. If you are interested in transforming global reporting standards and being a part of this ground-breaking program, please reach out to us or your CEM Relationship Manager directly.

GRSii is an important reporting piece that will significantly improve the reporting landscape for institutional clients and, more importantly, provide a benefit for the millions of pensioners every year. CEM is looking forward to expanding the client dialogue and feedback loop around clear and consistent reporting standards.