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 January, 2006 - 31 December, 2019

Categories: Composite Construction

Source: Guidance Statement on Composite Definition

Why should each discretionary fee-paying portfolio be included in at least one composite? If a portfolio represents a style we never plan to market in the future, why should we have to include it in a composite?

The standards are ethical guidelines for firms to follow when presenting their performance results. The Standards are based on the principles of fair representation and full disclosure. They are not marketing guidelines. The requirement for firms to include all fee-paying discretionary portfolios in at least one composite ensures that firms record an accurate picture of the firm’s complete performance record. without this requirement, there is a potential for firms to exclude poor performing portfolios from the appropriate composites. Portfolios that might otherwise belong in the composite could be grouped with “unmarketed” portfolios. Because the intent of the Standards is to accurately and fairly represent firm performance, all fee-paying discretionary portfolios must be included in at least one of the firm’s composites. Firms are also required to disclose that a complete list of the firm’s composites is available on each compliant presentation. Potential clients can review descriptions of all composites to determine if any similarities exist. Prospective clients can also request to see additional information on the firm’s historical performance record through other composites on the list. These requirements exist to provide prospective clients with a complete picture of the firm’s investment performance achieved on all accounts under the firm’s discretion.