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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Archived

Effective: 1 November, 2012 - 31 December, 2019

Categories: Portability

Source: GIPS Executive Committee

The Guidance Statement on Performance Record Portability states:

When a manager, group of managers, or an entire firm joins a new firm or affiliation, The GIPS standards require that performance of a past firm or affiliation must be linked to or used to present the historical performance of a new or acquiring firm if, on a composite specific basis:

substantially all the investment decision makers are employed by the new or acquiring firm (e.g., research department staff, portfolio managers, and other relevant staff);
the decision-making process remains substantially intact and independent within the new or acquiring firm; and
The new or acquiring firm has records that document and support the performance.

Where it says “on a composite specific basis,” what does “composite” refer to in this instance? Can a firm create the composite history from the prior firm based only on the portfolios that transfer to the new firm if the history is representative of the old composite?

The concept of portability revolves around the ability to bring a track record from one firm to another. It would not be representative to recreate a record with only selected portfolios. The word “composite” refers to the entire composite from the old firm. In order for a firm to be able to link the composite from the old firm to the ongoing performance of the new firm, the entire composite performance history, including all portfolios, must be used. While the GIPS standards do not have a requirement that all portfolios must transfer from the old firm to the new firm, the firm must have all the records needed to document and support the entire composite performance history.

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