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 June, 2009 - 31 December, 2019Categories: CashSource: GIPS Executive Committee
In most instances our clients select the cash vehicle into which excess cash is swept each evening. We recognize the income on this cash vehicle in the portfolio return. The client-selected cash vehicle recently “broke” the $1.00 NAV. As the client selected the cash vehicle, we wish to exclude the impact of the change in NAV from the portfolio return. May we do so?
No, you must include the impact of the change in NAV on this cash vehicle in the portfolio return and composite return. Even if the firm does not control the cash vehicle used, it does control the amount of portfolio assets that are held in cash and cash equivalents. Because the firm chose to have portfolio assets “invested” in cash and cash equivalents, the firm is responsible for the performance of this investment and the change in NAV must be included in the total return of the portfolio. Additionally, the firm must continue to include the portfolio in the respective composite.