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: Composite Changes

Source: GIPS Handbook, 3rd Edition

If we currently have a composite for a particular strategy, and the strategy changes, can the performance track record continue to be associated with the new strategy? The change in question is the addition of resources to the investment process. To be precise, we have added a fundamental portfolio manager to a strategy that was previously run using a quantitative (models) process. The new portfolio manager is an additional layer added on top to further refine the stock picks. The quant models will still be used as before.

As most firms evolve, they modify their investment process through the use of new technologies and resources. It would seem clients would expect their firm to refine and improve the investment process.

Composites must be defined according to investment mandate, objective, or strategy. In the situation presented, if the investment objective of the portfolios in the composite remains constant as the firm modifies its investment process, the firm should not create a new composite. If, however, the investment mandate, objective, or strategy of the portfolios in the composite has changes as a result of the addition of the new portfolio manager, the firm should create a new composite and the performance track record starts for that new composite when portfolios meeting the definition of the new composite are added to it. The firm must clearly document its decision and decision-making process.

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