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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Archived

Effective: 1 March, 2006 - 31 October, 2012

Categories: Benchmarks

Source: GIPS Handbook, 2nd Edition

Firm B has historically used the S&P 500 as the benchmark for its U.S. Equity composite. However, Firm B recently changed its benchmark retroactively to the Wilshire 5000 on the composite presentation. In the presentation, the firm provides the date of the change and explains that the Wilshire 5000 is a benchmark that better reflects the composite’s investment history. However, the change was made because the lower return of the Wilshire 5000 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 Standards by providing the date and reason for the change.

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