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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ArchivedEffective: 1 November, 2012 - 31 December, 2019Categories: BenchmarksSource: GIPS Handbook, 3rd Edition
Firm B has historically used the Large-Cap Index as the benchmark for its U.S. Equity Composite. However, Firm B recently changed its benchmark retroactively to the Broader Large-Cap Index in the composite presentation. In the compliant presentation, the firm provides the date of the change and explains that the Broader Large-Cap Index is a benchmark that better reflects the composite’s investment history. However, the change was made because the lower return of the Broader Large-Cap Index provided a lower hurdle rate for the returns of the composite. Is this change permissible under the GIPS standards?
No. Firm B has changed its benchmark primarily to improve its historical performance by lowering the benchmark return. Firm B has violated the GIPS standards even though it has technically met the requirements of the GIPS standards by providing the date of, description of, and reason for the change.
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