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 December, 2019

Categories: Non-fee-paying Portfolios

Source: GIPS Handbook, 2nd Edition

Firm E has a number of fee-paying client portfolios managed to a particular investment strategy. Firm E also manages assets following this same strategy for clients who do not pay fees, and wants to include these portfolios in a composite. Should Firm E create two separate composites for its fee-paying and non-fee paying portfolios?

In general, investment management fees should not be used as criteria for composite definition. Because the assets are managed in the same manner and follow the same strategy, the non-fee-paying portfolios should be included in the same composite as the fee-paying portfolios. The GIPS standards do not, however, require that non-fee-paying portfolios be included in a composite. If Firm E chooses to include non-fee-paying portfolios in the composite, Firm E is required to present, as of the end of each annual period, the percentage of the composite assets represented by the non-fee-paying portfolios.