Q & A Database

The GIPS Standards Q&A database contains questions and answers (Q&As) on various searchable topics that provide additional interpretation on an issue. Q&As are considered to be authoritative guidance and must be followed in order to claim compliance with the GIPS standards.

Content from prior Q&As was included in the GIPS Standards Handbook as much as possible and many Q&As were archived. Change the Status drop-down filter to "Archived" to see the archived Q&As.

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Archived

Effective: 1 November, 2012 - 31 December, 2019

Categories: Dispersion

Source: GIPS Handbook, 3rd Edition

If the internal dispersion measure is calculated using only portfolios that are included in the composite for the full year yet composite performance for the year includes portfolios that were added and removed from the composite during the year, do the two numbers really have relevance to one another? This especially holds if the actual composite performance differs materially from the performance of the full-year-only composite because the composite performance was impacted by “partial year” portfolios that are not included in the internal dispersion calculation.

The GIPS standards acknowledge that by using only portfolios that have been included in the composite for the full year for the annual internal dispersion calculation, the internal dispersion number will not precisely correlate with the actual composite performance. The internal dispersion will inform a prospective client of the spread of annual returns of those portfolios included in the composite for the year. The GIPS standards do not require a specific measure of internal dispersion. A firm could present the standard deviation, the range, quartiles, or any other appropriate measure of internal dispersion.

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