Reference was then made to the Global Investment Performance Standards (GIPS(R)):
- Question: Can a GIPS-compliant firm show a rep account's performance?
- Answer: Yes! Nowhere in the Standards is this prohibited.
- To provide performance attribution results
- To show actual holdings and trading
- To provide additional insights they may feel would prove helpful to the prospect
Such information should be considered "supplemental." In addition, it should include appropriate disclosures, to ensure the recipient understands what they're getting.
But rep portfolios not allowed? Of course they are!
While they aren't specifically PERMITTED (see below, they actually ARE addressed!), the fact that they are not explicitly PROHIBITED means that they can be employed. Clearly (a) best practice is ALWAYS the composite presentation, and (b) compliant firms are obligated to make every reasonable effort to provide the appropriate compliant composite presentation to the prospect. If they can give them a rep account's details, they shouldn't have any difficulty giving them the composite presentation, too! And (c), we would expect appropriate disclosures to be included with any rep portfolio details, to alert the reader of the possiblity that it was cherry-picked.
The Supplemental Information Guidance Statement actually makes reference to representative portfolio information being permitted: