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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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