GIPS characteristics minimum, trouble, forward, another

islandgyrl

"Include all actual fee-paying, discretionary portfolios in composites for a minimum of five years or since firm or composite inception. After presenting five years of compliant data, the firm must add annual performance each year going forward up to a minimum of ten years."

I'm having trouble understanding this. Can anyone explain it another way?

farrukhsadiq

i didnt understand it. but it looks like its saying that presenting 5 years of retrospective data before the compnay become GIPS compliant and then add data from each year after GIPS compliance for 10 years .

jim8z3

When you decide to be GIPS compliant you are required to include 5 years past performance (results of the past, before adoption must be present per GIPS) in the year you make a decision. However it is quite possible you had not yet operated for five years - in that case you would need to present past performance per GIPS, for the entire previous period say 4, 3, 2, 1 year(s).

Thereafter you would need to present information by adding a year till you reach ten years. Suppose you had operated for 7 years before adopting GIPS. In the first year you would report 5 years as a REQUIREMENT (but you can do more if you wish, say entire 7 years). In the 8th year of reporting, you will have dropped the 3 years relating to the periods before adopting GIPS and report 10 years - 2 before adoption, and 8 for the years after adopting GIPS. Thus you add one year till you are at 10. When you reach ten you begin to drop oldest composites (FIFO).

Was this helpful? This concept is sometimes tricky - I suggest you try multiple choice questions.

joemoran

So if a company was started in 2006 but decided to be GIPS compliant in 2010, can it state the results for the 4 years though they are not GIPS compliant?
Or does it have to wait until 2015 when it has 5 years worth of GIPS compliant data?