Global Valuation & Performance (GV&P)
The Global Valuation & Performance Unit has three key functions:
- Homogenizing the procedures for valuating the portfolios of collective investment undertakings, pension funds and portfolios managed or advised by the different companies that make up BBVA Asset Management, abiding in any case by the regulatory requirements that may apply.
- Be the reference basis for prices, analytics and market data for the different companies, units and systems, both for valuation of portfolios and the determination, if applicable, of the net asset value of collective investment institutions or pension funds and for feeding the tools needed for managing investments and risks.
- Establish the basic source of returns and performance statistics for collective investment institutions, according to maximum standards and respecting any applicable regulatory requirements at all times.
All without prejudice to valuation functions and, where applicable, calculation of the net asset value that the assessment department of the pertinent BBVA Asset Management company will implement in accordance with the requirements set out in regulations.
To carry out these functions, the Global Valuation & Performance Unit is divided into these specialized areas:
1. Global Valuation & New Developments
The main goal of this area is to ensure the correctness of the prices of the instruments at collective investment institutions, pension funds or portfolios managed by the companies making up BBVA Asset Management via strict supervision. It is also responsible for collecting, calculating and distributing analytics data (term, IRR…) on fixed-income instruments and OTC deltas and gammas.
If the valuation functions of portfolios managed by BBVA Asset Management companies are executed by companies outside the BBVA GROUP, this unit will be in charge of agreeing on valuation methodologies and reviewing price incidents on a daily basis.
The main purpose of the Global Performance Department is to ensure integrity and accuracy in measuring the investment results of collective investment institutions, pension funds and portfolios managed by the different BBVA Asset Management companies. For this reason, it is responsible for:
- Defining the criteria and methodologies to use, making these measurements and distributing information. The most relevant measurement and analysis methods are Performance versus Benchmark, Performance versus Peers and Performance Attribution.
- Ensuring definition according to the standards and correctness of benchmark data, keeping information on them, reconciling index returns with those obtained by their baskets and analyzing their suitability.
This unit is also in charge of ensuring compliance with GIPS (international ethics standards for objective measurement and transparent and complete reporting of information on the investment performance of companies, which are accepted in more than 30 countries), where it is responsible for drafting the reports, implementing the methodologies and procedures to comply with them, documentary management and relations with the compliance verifier.
3. Global Procedures and Alternatives (GP&A)
The Global Procedures and Alternatives Department is responsible for homogenizing assessment and performance criteria and policies at a global level. One of our main functions is to guarantee that the process for admitting new assets and brokers strictly complies with corporate criteria, thus protecting our customers' interests.
This area is also responsible for establishing the assessment criteria for complex alternative assets, such as private equity funds, hedge funds, real estate, second-tier companies and other assets that require complex assessment techniques or models, which must be taken into consideration, always in the framework of regulations applicable to every product and in every jurisdiction by the pertinent assessment departments.
Convinced of the advantages of complying with best practices, we have been pioneers in adopting Global Investment Performance Standards (GIPS) in Spain, presenting the results of the investment funds and pension funds managed by the companies in BBVA Asset Management, in complying with this regulation since 2002.
In April 1999, AIMR® (Association of Investment Management and Research, currently the CFA Institute) published GIPS standards for the first time. In January 2010, the revised standards were adopted, reflecting the joint cooperation of 35 country sponsors that help to develop and promote the adoption of GIPS standards. This latest version is an update of the 2005 edition, the second review since their introduction in 1999.
Compliance with GIPS standards improves the level of investors' confidence because they know that the information on yields is a fair and true representation of actual results.
GIPS standards are self-regulation ethics standards for the truthful and complete reporting of information on investment yields that require fund management companies to report at least 5 years of historic yields, or, if they have existed for less time, since the creation of the company or the strategy.
GIPS standards establish a series of requirements and recommendations, in which commonly accepted principles and criteria are defined with regard to source data, account grouping criteria based on common investment strategies (aggregated), accepted yield calculation methods, as well as minimal information comprised of the yield log, and other relevant information to include for suitable understanding of the risks for current customers or potential investors.
GIPS standards consist of a series of requirements that companies must follow in order to declare their compliance, as well as freely-adopted recommendations. Achieving the objective of presenting complete, reliable and relevant information requires compliance not only with the minimum requirements.
In accordance with our commitment to excellence and transparency, at BBVA Asset Management we have adopted the majority of GIPS recommendations and we are committed to adopting more recommendations insofar as it is relevant to our customers and potential investors.