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.
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ArchivedEffective: 1 November, 2012 - 31 December, 2019Categories: New Portfolios/AccountsSource: GIPS Handbook, 3rd Edition
Firm B obtains a new client who will eventually invest $25 million with the firm in its Value strategy. However, assets will be transferred to the manager in $5 million increments over a period of 18 months. The firm’s policy for the Value composite is to include new portfolios at the beginning of the first full month under management. How should Firm B treat this portfolio for composite inclusion purposes?
Because Firm B is not receiving the entire funding at once, it must consider whether the incremental funding will affect its ability to implement the Value strategy. The timing of the client’s funding might require the firm to exclude the portfolio beyond the first month under management. This can result in an exception to the composite’s new portfolio inclusion policy. However, if Firm B determines that the incremental investing does not affect the implementation of the style or strategy, then Firm B should include the portfolio in the Value composite beginning with the first full month under management.
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