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 December, 2019Categories: CashSource: GIPS Handbook, 2nd Edition
Firm A manages the portfolios of several clients and has full investment discretion over their assets. At the end of each day, the excess cash in each portfolio is swept into the custodian’s money market fund. Since Firm A does not manage the money market fund, it does not include the cash portion of the portfolio in its total return performance calculation. Is this practice in compliance with the GIPS standards?
No. Even if Firm A does not control the cash investment, it does control the amount of portfolio assets that are held in cash equivalents. Since Firm A chose to have portfolio assets “invested” in cash, Firm A is responsible for the return the cash assets earn and it must be included in the total return of the portfolio.