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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Current

Effective: 1 July, 2021

Categories: Pooled Funds

Source: GIPS Standards Technical Committee

We manage a pooled fund that is classified as a limited distribution pooled fund. Participants in the pooled fund may make contributions or withdrawals quarterly. Because the pooled fund allows cash flows only quarterly, does this scenario qualify as our firm controlling the cash flows so that we meet the first criterion for being able to present money-weighted returns instead of time-weighted returns in a GIPS Report?

This scenario does not qualify as the firm controlling the cash flows. In this case, the investor controls when to make the contribution or withdrawal, but the investor can make those cash flows only at a specific time. When the firm controls the cash flows, the investor must provide the funds when the firm asks for them. Provision 1.A.35 requires firms to present time-weighted returns unless certain criteria are met, in which case the firm may present money-weighted returns. The first criterion that must be met is that the firm must have control over the external cash flows. The firm would not be considered to have control over the external cash flows when a limited distribution pooled fund has periodic openings, and the firm would therefore not be allowed to present money-weighted instead of time-weighted returns in a GIPS Report.

Q & A Database

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