What counts as supplementary information under GIPS?

Question

AcadiFi · Accepted Answer

Under GIPS, SUPPLEMENTARY INFORMATION is any performance-related information that is NOT specifically required by GIPS but is relevant to understanding the composite's risk, return, or investment process.

EXAMPLES of acceptable supplementary information:
- Carve-out returns (before 2010, carve-outs were problematic; now allowed with cash allocation)
- Theoretical performance (model portfolios)
- Gross-of-fee returns where only net is required
- Peer group comparisons
- Pre-merger firm track records
- After-tax returns
- Portfolio holdings characteristics (sector weights, duration, credit quality)
- Extended-period returns
- Attribution analyses
- Scenario or stress-test results

RULES:
1) Supplementary information must be clearly LABELED AS SUPPLEMENTAL.
2) Must NOT be misleading — accurate, appropriate context.
3) Must NOT conflict with GIPS-compliant presentations. If the main composite shows 8% net, a supplemental number cannot contradict this.
4) Supplemental data should RELATE TO THE COMPOSITE being presented, not be used to distract.
5) Supplementary disclosures should be in proximity to the composite presentation.

WHAT IS NOT PERMITTED:
- Hypothetical/backtested results presented without clear disclosure
- Returns for excluded portfolios shown alongside composite
- Pre-compliance data presented as if GIPS-compliant
- Simulated or projected returns without warning

At Meridian Global Advisors, the Emerging Markets Equity composite report includes supplementary information: 10-year risk-adjusted return (Sortino ratio), sector allocation history, and a comparison to the MSCI EM Index. All are clearly labeled supplemental.

GIPS 2020 introduced the concept of CARVE-OUTS with allocated cash, making carve-out presentations permissible under specific conditions — previously they were restricted.

For CFA Level III, remember: supplementary info must be labeled, not misleading, relevant, and consistent with GIPS presentations.

What counts as supplementary information under GIPS?

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