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 GIPS® Trademark Guidelines 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 November, 2012 - 31 December, 2019

Categories: Carve-Outs

Source: GIPS Handbook, 3rd Edition

For periods prior to 1 January 2010, Firm A carved out U.K. equity performance from its Euro-Pacific equity portfolios and combined it with its U.K. equity portfolios to create a U.K. Equity Composite. Before including the carve-out in the U.K. Equity Composite, the firm allocated cash to the U.K. equity segment on a pro rata basis, based on the level of U.K. equities as a percentage of the total equity exposure. What disclosure is necessary regarding the use of cash allocation for these historical periods?

For periods prior to 1 January 2010, the U.K. equity segment may be included in the U.K. Equity Composite provided the segment meets the carve-out requirements, cash is allocated to the carve-out, and the method used to allocate the cash to the carve-out is disclosed. The firm must include in the U.K. Equity Composite all carve-outs from all portfolios meeting this definition.

Sample Disclosure:
“Firm A’s U.K. Equity Composite includes all dedicated U.K. equity portfolios. For periods prior to 1 January 2010, the composite also includes the U.K. equity segment of portfolios that are managed to the firm’s Euro-Pacific equity strategy. Cash is allocated to the carve-out segment returns on a pro rata basis depending on the proportion of the U.K. assets to total portfolio assets based on beginning-of-period market values.”

For periods beginning on or after 1 January 2010, a carve-out must not be included in a composite unless the carve-out is managed separately with its own cash balance. Cash allocation is prohibited for periods that begin on or after this date.

Please also see original Q&A