GIPS Question

[CFAZod]

The minimum historical performance record required to be disclosed under GIPS for a 10-year old composite is _______.

a) 3 months
b) 1 year
c) 5 years
d) 10 years

 

[CFAZod]

The minimum historical performance record required to be disclosed under GIPS for a 10-year old composite is _______.


Correct answer: 5 years

Rationale:
The minimum is 5 years or since inception, if the composite is less than 5-years old.

Gotta love Allen Resources.

 

[bigwilly]

That was an easy one.

 

[cfashark]

Just asking for confirmation:
for level one we need to study GIPS only till II.0 Fundamentals right?


ps: why do i get the feeling that very old people wrote all the CFAI official study material?

 

[CFAZod]

From the text:

"... and require firms to initially show GIPS-compliant history for a minimum of five
(5) years or since inception of the FIRM or COMPOSITE if in existence
less than 5 years. After presenting at least 5 years of compliant
history, the FIRM MUST add annual performance each year going
forward up to ten (10) years, at a minimum."

It may be easy, but from the question we don't know at what point this 10 year old composite starting claiming compliance with the GIPS. If it was ten years ago, then after the minimum 5 years, this composite, in order to claim GIPS compliance, needed to add a year for each of the additional 5 years in existence, at a minimum.

 

[bigwilly]

I think the question was saying if the Composite was claiming GIPS compliance starting "today". It was easy for me b/c our composites are AIMR/CFA Institute compliant. I do understand what you are stating and I think you over analyzed the question, something I tend to do often. I get into the problem of over thinking the question and see the answer 3 steps ahead when they only wanted the 1st step so I was wrong...it is very frustrating. It was a good question though.

 

[CFAZod]

Yeah, Bigw, the problem is the overanalysis came first and I recognized both sides of the coin. The text does frequently use the example of compliance starting "today", you're right, of course. My new mantra is KISS- Keep it Simple, Stupid.