Q & A Database

The GIPS Standards Q&A database contains questions and answers (Q&As) on various searchable topics that provide additional interpretation on an issue. Q&As are considered to be authoritative guidance and must be followed in order to claim compliance with the GIPS standards.

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Effective: 1 March, 2021

Categories: Information Outside of GIPS Reports

Source: 2020 GIPS Standards

Provision 2.A.31 requires that if a firm uses model investment management fees to calculate composite net-of-fees returns, the returns calculated must be equal to or lower than those that would have been calculated using actual investment management fees. Additionally, in the GIPS® Standards Handbook discussion of Provision 2.A.31, it states that a firm may wish to include a second net-of-fees return in a GIPS Report that is created using a model investment management fee specific to a prospective client. If this second net-of-fees return does not meet the requirement of being either equal to or lower than the return that would have been calculated using actual investment management fees, this second net-of-fees return must be labeled as supplemental information and there must be a disclosure explaining how the firm arrived at the return.

The above explanation is limited to how composite net-of-fees returns that do not meet the requirement of being either equal to or lower than the returns that would have been calculated using actual investment management fees could be presented in a GIPS Report. If our firm uses a model investment management fee and calculates composite net-of-fees returns that are greater than returns that would have been calculated using actual investment management fees, can these returns be presented outside of a GIPS Report? If so, what disclosures would be appropriate to include with these returns? Finally, may we submit these returns to consultant databases?

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