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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Effective: 1 March, 2006 - 31 October, 2012

Categories: Fees

Source: GIPS Handbook, 2nd Edition

An investment management firm manages both pooled funds and separate client accounts and charges investment management fees for its services to both. Clients may hold pooled funds as part of their separate account investments and in this case are being charged double for investment management services at both the pooled funds and separate account level. The firm deposits on a monthly basis, a “fee rebate” to client accounts holding the pooled funds. How should this “fee rebate” be treated in performance calculations?

If an investment management firm reduces its management fee charged to clients, the recommended method is to waive the appropriate portion of the management fee so that there is neither a withdrawal nor deposit of cash (i.e., payment or refund of fees). The net-of-fees return must reflect (be reduced by) the effect of the fee minus the rebate. The net-of-fees return will be higher than if it were calculated using the full fees charged at both the pooled fund and separate account levels. The gross-of-fees return must be calculated as if the fee were not charged and the rebate not given.

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