I find the following statement to be one of the most confusing ones in the CFA curriculum:
The GIPS standards require firms to show investment performance for a minimum of five years, or since the inception of the firm or composite if either has existed for less than five years. After presenting at least five years of GIPS-compliant history, the firm must add annual performance each subsequent year building to a minimum of 10 years.
Why do they talk about 5yrs if 10yr is the minimum requirement?
Disclaimer: I am not 100% sure on the answer below.
I think upon initially presenting data (e.g. when you first claim GIPS compliance) it is fine to show 5 years of GIPS compliant data (whether or not your firm has existed for more than five years) and then gradually build up to 10 years of GIPS compliant performance data. From then on you have to present 10 years of compliant data until the end of time (or the end of GIPS). To me it seems like the 5 year clause is only there to make it easier / less burdensome to initially claim GIPS compliance and help GIPS to become more widely adopted.