“Firms must present a minimum of five years of GIPS-compliant hsitory or since inception if less than five years. After presenting at least five years of compliant history, the firm must add annual performance each year going forward, up to ten years, at a minimum.”
“Firms may link years of noncompliant performance but must present only complaint data for periods beiginning on or after January 1, 2000.”
I think this is a bit confusing, so I have put together the below scenario based on the above requirements; please let me know if you agree/disagree:
If i want to claim GIPS compliance on January 1, 2010 and my firm has been in existence for more than 5 years, I have to show 2005 --> 2009. Then going forward I have to show 2010 --> 2014 in order to make the 10 years. After 2014, I am allowed to remove 2005 and show 2006 --> 2015 (to stay at a minimum of 10 years of performance).
If i want to claim GIPS compliance on January 1, 2010 and my firm has been in existence for less than 5 years, I have to show year of year of existance --> 2009. If year of existance was 2007, I have to show 2007 --> 2010. Then going forward I have to show 2010 --> 2016 in order to make the ten years. After 2016, I am allowed to remove 2007 and show 2008 --> 2017 (to stay at a minimum of 10 years of performance).
If in 2010, for whatever reason I want to be super aggressive and show returns a lot further back than required, that’s fine. I can link the returns all the way back to 1995 if I want to to show 1995-2010 returns. The 1995 - 1999 portion may be non-GIPS compliant, but the 2000 and beyond returns have to be GIPS-compliant.
And by GIPS compliant, it means compliant with today’s GIPS, not in the year performance was shown (for example, if I am showing 2000 returns I can’t show them quarterly because that was allowed back then).
Of course, if I am using 1999 returns, then I can show quarterly returns, since anything before January 2000 may be non-compliant.
The one I was really confused about it the first one. So basically you need five years of compliant history and then show all future ones until 10 years. As opposed to going 10 years back from 2010 right?
No, I think the original poster had it right. You just need 5 years. And since you cannot report non-compliant data after 2001, you would only report 5 years of GIPS-compliant data if that’s all you have, and then adding additional years until you get to ten.
The show, as my understanding, the performance statement shows full year figures , monthly or quarterly data is used to calculate something, not to show ? (and avaiable if requested)
I say that because I see all example CFAI give us show full year figures though i have no practice experiences…
else agree :))
for the 2 statements, let’s say in 2007, firm want to be compliant…the firm has to present 2002-2006 figures comply GIPS- thats enough. If they want to show more (back ward, let’s say 5 years more), 2000-2001 has to comply, 1997-1999 may none comply…
Spent several hours on GIPS today. Upon review, I believe the only incorrect point I have above is the second to last one (“And by…”). If you are showing past returns, the performance only needs to be compliance for GIPS of that time period. So you can show settlement date accounting for a 2004 return or quarterly return for a 2000 return.
I’m failing to see the point of making the distinction between firm and composite in:
A firm is required to initially present, at a minimum, five years of annual investment performance that is compliant with the GIPS standards. If the firm or the composite has been in existence less than five years, the firm must present performance since the firm’s inception or the composite inception date.
(Institute 202)
Institute, CFA. 2016 CFA Level I Volume 1 Ethical and Professional Standards and Quantitative Methods. CFA Institute, 07/2015. VitalBook file.
The citation provided is a guideline. Please check each citation for accuracy before use.
To be compliant with GIPS, you need to have firm wide compliance not just in part… correct? So what is the meaning of that statement?