Performance Perspectives Blog

There seems to be a “lacuna” in the justification that was offered

by | Nov 7, 2011

I did not attend this year’s annual GIPS(R) (Global Investment Performance Standards) conference in Chicago, though we sponsored it, and four of my colleagues were present. I learned that someone raised a question which I put forward here a few days ago, regarding the apparent introduction of a new rule, prohibiting the introduction of accounts within the month. An attendee apparently submitted a question on this item, and it was explained that it was believed that this was always the Standards’ intent, or something to that effect.

Well, as this blog’s title suggests, there seems to be a lacuna in this justification. And, if you’re like me, you may find the term “lacuna” to be somewhat foreign to you. I learned of the word while reading Neal B. Freeman’s piece in this past weekend’s WSJ; the article marked the 50th anniversary of Bill Buckley’s God and Man at Yale. And so, turning to one of my favorite websites, I discovered that it means “a gap or missing part, as in a manuscript, series, or logical argument.” [emphasis added]

In this case, the missing part (or lacuna) seems to be the basis for this claim. Where in the Standards does one conclude that it was always the intent of the Standards? Surely there must be a paragraph that one can point us to. Absent that, my only conclusion must continue to be that this is a new rule, probably in response to some of my arguments challenging the aggregate method as a legitimate approach to measure a composite’s average return.

p.s., While Freeman may not be quite the sesquipedalian (user of long words) that Buckley was, Bill would most likely still have been pleased with the article.

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