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.
Content from prior Q&As was included in the GIPS Standards Handbook as much as possible and many Q&As were archived. Change the Status drop-down filter to "Archived" to see the archived Q&As.
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CurrentEffective: 1 January, 2020Categories: Benchmarks, Composite ConstructionSource: 2020 GIPS Standards
Firm A manages an equity composite in which the investment strategy is to track the S&P 500. Firm A now wants to expand the investment strategy to include non-U.S. large-cap equities and change the benchmark to a blended index of the S&P 500 and the MSCI EAFE indices. If Firm A discloses the date and description of the benchmark change and explains how the new index is created and rebalanced, is that sufficient for Firm A to continue claiming compliance with the GIPS standards?
No. In this case, because the benchmark defined the strategy for the composite, a change in the benchmark results in a change to the investment strategy. A material change in the strategy requires Firm A to create a new composite that reflects the new strategy.
Please also see the prior version