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.
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ArchivedEffective: 1 November, 2012 - 31 December, 2019Categories: Calculation Methodology, Client ReportingSource: GIPS Handbook, 3rd Edition
Does the firm violate the GIPS standards by reporting money-weighted rates of return to an existing client for their portfolio?
No. The GIPS standards do not address client reporting, and therefore, the GIPS standards would not be violated if the firm reported money-weighted rates of return to an existing client for their portfolio. The GIPS standards are primarily based on the concept of presenting the firm’s composite performance to a prospective client rather than presenting individual portfolio returns to an existing client. Money-weighted returns may add further value in understanding the impact to the client of the timing of external cash flows but are less useful for comparing one firm/manager to another and are, therefore, only required in the GIPS standards for private equity portfolios and closed-end real estate funds where the investment firm controls the cash flows. The IRR (or money-weighted return) represents the performance of the specific client’s portfolio holdings (i.e., influenced by the client’s timing and amount of cash flows) and measures the performance of the portfolio rather than the performance of the investment manager.