Performance Perspectives Blog

January 1, 2010 isn’t far away (large cash flows)

by | Jun 3, 2009

While many GIPS-compliant firms are preparing for January 2011, they also need to be aware of what’s in store for them in just seven months.

Most firms are aware of the new requirement to revalue portfolios for large cash flows (Para. 2.A.2.b.). But, have they looked at the broader picture? Let’s take the case of a wrap fee manager who relies upon their program sponsors for the returns they use for GIPS purposes. Have they validated that these entities have adopted a calculation methodology that will comply with these new requirements? If not, there’s not much time to get this addressed.

The standards for wrap fee allow managers to either use their own returns or rely on the sponsor, provided the sponsor adheres to the standards. This is a test case to ensure this is being done.

If you’re involved with wrap fee programs and rely on your sponsors, confirm that the returns will meet these requirements…the sooner, the better!

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