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 March, 2006 - 31 October, 2012Categories: Carve-OutsSource: GIPS Handbook, 2nd Edition
Firm A carves out U.K. equity performance from its euro-pacific equity portfolios and combines it with its U.K. equity portfolios to create a U.K. Equity composite. Before including the carve-out into the U.K. Equity composite, the firm allocates 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?
The U.K. equity composite returns (which includes both the carve-out segment as well as portfolios that are invested solely in U.K. equity) may be presented as a part of a GIPS compliant presentation provided the segment meets the carve-out requirements, cash is allocated to the carve-out (until 1 January 2010), 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 as well as 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 U.K. assets to total portfolio assets based on beginning-of-period market values.”
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