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.
The GIPS Standards Helpdesk is available for individual questions and typically responds to inquiries within 3 business days.
Search by category, status, date range, and/or keyword.
ArchivedEffective: 1 March, 2006 - 31 October, 2012Categories: Calculation Methodology, Client ReportingSource: GIPS Handbook, 2nd Edition
Does the firm violate the GIPS standards by reporting money-weighted rates of return to an existing client for their portfolio (which contains no private equity assets)?
No, the Standards would not be violated if the firm reported money-weighted rates of return to an existing client for their portfolio. The Standards are primarily based on the concept of presenting the firm’s composite performance to a prospective client rather than presenting individual portfolio returns to an existing client. The IRR (or money-weighted return) represents the performance of the specific client’s fund holdings (i.e., influenced by the clients’ timing and amount of cash flows) and measure the performance of the fund rather than the performance of the fund manager. Money-weighted returns may add further value in understanding the impact to the client of the timing of external cash flows, but are less useful for comparison purposes.