The GIPS Standards

Question 1

Definition of the firm - requirements:

Answer 1

1. GIPS is applied on a firm-wide basis.
2. Firm must be defined as a distinct business unit.
3. Firm assets include total value of discretionary / non-discretionary and fee / non-fee paying accounts.
4. Include asset performance of sub-advisers (assuming firm has discretion to do so).
5. Historical composites can’t be changed if firm changes organisations.

Question 2

Definition of the firm - recommendations:

Answer 2

Include the broadest definition of the firm with all geographical offices.

Question 3

Definition of the firm - requirements:

Answer 3

Document policies and procedures the firm uses to comply with GIPS.

Question 4

Firm fundamental responsibilities - requirements:

Answer 4

1. Firm must provide compliant presentation to all prospects.
2. Provide a composite list and description to all prospects (including those terminated within 5yrs). Clients can request specific composite details.
3. Firms with GIPS must be defined as separate from firms without when marketing together.
4. Encouraged to comply with recommendations and must comply with requirements.

Question 5

What should be done if country-specific regulations conflict with GIPS?

Answer 5

Firm must follow the applicable country-specific regulations, but disclose the conflicts with GIPS.

Question 6

Nine major sections of the GIPS standards.

Answer 6

1. Fundamentals of Compliance
2. Input Data
3. Calculation Methodology
4. Composite Construction
5. Disclosures
6. Presentation and Reporting
7. Real Estate
8. Private Equity
9. Wrap Fee / Separately Managed Account Portfolios