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: New Portfolios/Accounts

Source: GIPS Handbook, 2nd Edition

Firm B obtains a new client who will eventually invest $25 million with the firm in their Value strategy. However, assets will be transferred to the manager in $5 million increments over a period of 18 months. The firm’s policy for the Value composite is to include new portfolios at the beginning of the first full month under management. How should Firm B treat this portfolio?

Because Firm B is not receiving the entire funding at once, it must consider whether the incremental funding will affect its ability to implement the Value strategy. The timing of the client’s funding might require the firm to exclude the portfolio beyond the first month under management. In this way, the client mandate could result in an exception to the composite’s policy regarding new portfolios. However, if Firm B determines that the incremental investing does not affect the implementation of the style or strategy, then Firm B should include the portfolio in the Value composite without delay.

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