Understanding GIPS Inclusion Criteria

Hard Global Investment Performance Standards Key Concepts

As an investment firm, your company is aiming to demonstrate its adherence to the Global Investment Performance Standards (GIPS). A critical aspect of these standards is the definition and inclusion of all portfolios in claimed performance presentations. Your CFO has raised a concern about the historical performance data used for marketing new funds. One point he mentions is the need to clearly distinguish between discretionary and non-discretionary portfolios in performance metrics. Which of the following statements about GIPS key concepts is most accurate in this context?

GIPS requires that only discretionary portfolios are included in performance presentations, as non-discretionary portfolios do not reflect the firm's investment decisions.

GIPS mandates that all portfolios, whether discretionary or non-discretionary, must be included in performance presentations to ensure comprehensive representation of investment capabilities.

Under GIPS, performance results must always be calculated net of fees for both discretionary and non-discretionary portfolios before presentation.

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