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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Archived

Effective: 1 December, 2013 - 31 December, 2019

Categories: Composite Construction

Source: GIPS Executive Committee

We have a client whose assets are divided between several portfolios, but the assets are managed to the same investment strategy. The client wants to maintain the portfolios separately. Do we consider each portfolio for this one client as separate portfolios or do we combine the separate portfolios into a single combined portfolio for composite inclusion purposes?

One of the fundamental concepts of the GIPS standards is the creation of composites based on the strategies implemented by the firm. The GIPS standards require that firm composites must be defined according to investment mandate objective or strategy. The firm must determine how to construct its composites such that the composites represent the firm’s investment strategies and present performance fairly and accurately.

Since the portfolios described are all managed according to the same investment strategy, then they must be placed in the same composite.

It should be noted that if the portfolios are managed according to the same investment strategy, then the firm should combine “sub-portfolios” into one “master” portfolio for the appropriate composite such that composite calculations, such as composite minimum, number of portfolios and dispersion, are calculated using the “master” portfolio. If the portfolios are not managed according to one investment strategy, they would be considered individual portfolios and would each be placed in the appropriate composites; and all composite calculations, such as composite minimum, dispersion, etc. would be calculated using the individual portfolio.

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