Basic GIPS Question: Can composite be backfilled? all, 2000, concerning, management, existing

DarienHacker

Hi
A very simple question concerning GIPS composites:
An asset management firm wants to become GIPS compliant. They manage 10 portfolios and want to build two composites (5 portfolios in each). The portfolios are all managed since 2000 and all performance and trade data is still available.
Q: The firm wants to be compliant with GIPS starting 2013. Can they now use the original data from the existing portfolios to recalculate the portfolios and composites (GIPS compliant) and show a track record back to 2000?
Thanks for clarifying.
Best, alex

stockjaguar

This sounds ok assuming that the portfolios in each composite have similar investment mandate, objective and strategy and that historical data are GIPS compliant.

waldziuchna

I don’t see the carve out aspect since all the portfolios have been managed including a cash balance since inception.. For me, the question actually boils down to what performance data one can include at the initiation of GIPS compliancy.
Is GIPS only possible going forward or also backward?
Many asset manager implicitly manage GIPS compliant portfolios (since the guidelines make a lot of sense). If such an AM decides to become GIPS compliant, he would need to establish composites with the portfolios under management to fully adhere to the standards. Can the AM restate the composites back in the past because the portfolios were actually live and the data is still available?
Unfortunately I didn’t find any recommendation on the topic.
Thanks.

ishfaque

I guess cannot be backfilled. You only show the performance when you have real money invested in it and the returns are earned. You could show the backfilled or simulated returns as supplementary information.

ayodayo

Yes, the returns are earned and the portolios were discretionarily managed.
The reason for the question is that I want to understand what the impact for marketing to prospecitve clients is when GIPS is adopted. If past portfolios/composites can not be backfilled, newly GIPS compliant firms would start with a 1 year track record and would have to wait 4 more years until they could show a meaningful analysis of their returns. This seems odd.

SeanWest

You’re not really back-filling anything, you’re just presenting the returns that you earned in a specific period according to the GIPS Standards.

BelalM

When a firm becomes GIPS compliant it must present 5 years back if available (i.e. less if the firm is younger) - this is a minimum (assuming availability), and I can’t think why firms would not be allowed to extend this - I reckon they’d be encouraged to (though firm-wide, not selectively, I would have thought).  Backfilling generally relates to self-selection bias, which would not be in play if everything were presented.

hardwork24

lmb wrote:
When a firm becomes GIPS compliant it must present 5 years back if available (i.e. less if the firm is younger) - this is a minimum (assuming availability), and I can’t think why firms would not be allowed to extend this - I reckon they’d be encouraged to (though firm-wide, not selectively, I would have thought).  Backfilling generally relates to self-selection bias, which would not be in play if everything were presented.
They must present a minimum of 5 years up to 10 years, if available.

malbec

darkstar wrote:
You’re not really back-filling anything, you’re just presenting the returns that you earned in a specific period according to the GIPS Standards.
+1

kkn006

The firm want to be compliant with GIPS since 2013. Does it mean they want to show the compliance statement on their performent presentation and marketing documents…since 2013?
They can do whatever they want in the current performance statement now (2012 and prior..). Make sure that they do not attache a compliance statement….
If they currently do not present as compliant with GIPS, then…in 2013, when they want to do it, they have to recalcualate and represent the performance statements….to comply all requirements
So, they should comply now to avoid restate in future….