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 November, 2012 - 31 December, 2019

Categories: Incubator Funds

Source: GIPS Handbook, 3rd Edition

Firm F seeks to establish a record for managing aggressive growth portfolios but does not yet manage client funds to that style. To create a performance history to show potential clients, the firm uses its own capital to create a portfolio that is managed to an aggressive growth style and does not charge a management fee for this portfolio. Can the firm present this performance in a new aggressive growth composite and remain in compliance with the GIPS standards?

Yes. Firm F may create an aggressive growth composite consisting only of the firm’s seed capital. The firm must show in the compliant presentation the percentage of composite assets that are non-fee-paying as of each annual period end, which in this case equals 100%. The composite performance record would begin with the inception of the one portfolio and, therefore, would not have any prior history. As the firm acquires portfolios that are managed to this strategy, the new portfolios’ performance will be included in the composite as soon as they meet the composite inclusion criteria the firm establishes for the composite. Firms should disclose if a composite contains proprietary assets.

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