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.

The GIPS Standards Helpdesk is available for individual questions and typically responds to inquiries within 3 business days.

Search by category, status, date range, and/or keyword.

Category

Advertising Aggregate Method Alternative Investments Asset Owner Assimilating Assets Benchmarks Calculation Methodology Carve-Outs Cash Cash Flow Changes to the Standards: 2006 GIPS Client Reporting Client Updates Composite Calculations Composite Changes Composite Construction Consultant Questionnaires Corrections to the 2006 GIPS standards Creation Date Currency Definition of the Firm Disclosures Discretion Dispersion Early Adoption Effective Dates Error Correction Fees FINRA Firm Assets Firm Notification Requirement Fixed Income Fundamentals of Compliance General/Miscellaneous GIPS Reports Inception Date Incubator Funds Information Outside of GIPS Reports Leverage/Derivatives List of Composite Descriptions Lists of Composites and Pooled Funds Minimum Asset Level Model Results New Portfolios/Accounts Non-fee-paying Portfolios Overlay Strategies Partial Period Returns Performance Examinations Performance History/Track Record Pooled Funds Portability Private Equity Providing GIPS Reports Real Estate Recordkeeping Risk Securities Lending Sub-Advised Assets Sub-Advisors Supplemental/Additional Information Terminated Portfolios Total Asset Owner Assets Total Fund Definition Trade-Date Accounting Valuation Verification Wrap Fee Portfolios

Status

Organization Type

Effective

Keyword

1 Result

Archived

Effective: 1 December, 2013 - 31 December, 2019

Categories: Incubator Funds

Source: GIPS Executive Committee

We are starting an investment strategy but currently do not have any clients. As such, we would like to start the strategy with a proprietary portfolio. However, once we receive a client account managed in this strategy (which may happen up to 2-3 years later) we will close the proprietary portfolio.

Can we create a composite and continue to use the historical performance of the proprietary portfolio by simply adding any subsequent client accounts we receive to the composite? The composite would contain the historical performance of the proprietary portfolio but would continue on with only the new client portfolios, just as a normal composite would.

Yes, the situation you describe is appropriate. Performance of a proprietary portfolio (also known as a seed or incubator fund) may be included in a composite if the portfolio is composed of actual assets managed by the firm. As with any other terminated portfolio, the performance history of the proprietary portfolio will remain in the composite up to the last full measurement period that the proprietary portfolio was under management. The historical performance of the composite will continue to include the proprietary portfolio’s performance.

Please note that firms should disclose if a composite contains proprietary assets and if those proprietary assets are non-fee-paying portfolios, the firm must present the percentage of composite assets represented by non-fee-paying portfolios as of each annual period end.

Please also see original Q&A