Tuesday, May 1, 2012

GIPS Portability: what does "one year" mean?

The Global Investment Performance Standards (GIPS(R)) have provisions to accommodate firms and individuals that move their skills from one place to another. For example, the emerging markets team from Firm A decides to either set up shop themselves or move in with Firm B. Or, if Firm X acquires or merges with Firm Y.

We find the following in ¶ I.5.A.8.b: "If a FIRM acquires another firm or affiliation, the FIRM has one year to bring any non-compliant assets into compliance." What does this mean?

One sentence just isn't enough to explain what a firm is obligated to do. I have had many discussions on this topic, and have found very different views. In April's newsletter (which is admittedly late ("my bad"), but will appear very shortly), I provide my views on this matter. I welcome your comments, be they in support, in opposition, or simply if you have further questions on this important matter. Please email them to me. Or, post a comment below! Thanks!

Oh, and this topic will also be the subject of The Spaulding Group's monthly webinar (date & time TBA!)


  1. Hi,

    In the final draft of the GIPS Standards Handbook online, they state that the assets of the non compliant firm must meet all the requirements of the GIPS standards as of the first full reporting period one year after the acquisition date. To me this would mean that if a non compliant firm was acquired by a compliant firm on 3/12/12 then the compliant firm would have to bring these assets into compliance as of 3/31/13 (first full reporting period one year after the acquisition date). This seems consistent with the corresponding Q&A where they lay out a similar example but use year end dates which simplifies the issue.

    In addition, using my example above, let’s say that Firm A (compliant firm) manages a strategy that goes back to 2008 and Firm B (non compliant firm) manages the same strategy going back to 2005. The combined entity comes to the conclusion that Firm B’s track record is the surviving record going back to 2005. If the firm is asked for a compliant presentation on 3/31/13, I think they would need to provide a complaint presentation going back to 2005.

  2. Bobby, thank you for point this out to me; I had not seen this but will review it.

  3. Bobby, I reviewed the document and unfortunately still feel that this is a bit ambiguous; this has been the problem since this was first developed. WHAT does this mean? The example fails to spell it out in much detail. In addition, Q&A #6 seems to support my position.


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