Which statement about GIPS is true?

Which statement about GIPS is true?

• A. GIPS presentations must be provided to all prospective clients
• B. GIPS compliance eliminates external audits
• C. GIPS ensures all portfolios are included regardless of survivorship
• D. GIPS is optional for private funds

Answer: (D)

GIPS are voluntary performance-reporting standards. Investment managers decide whether to claim compliance, and if they do, they must follow the full set of rules. Because adoption is optional, private funds can choose to claim GIPS compliance if they want to market their performance, but there is no obligation for private funds to do so. Compliance is about marketing materials and consistency, not a regulatory mandate. External verification of GIPS claims is optional, not required, so the existence of an independent audit is not a given. GIPS also requires including all portfolios that meet the firm’s inclusion criteria and addresses survivorship bias; it does not guarantee that every single portfolio is included regardless of survivorship. So the statement that GIPS is optional for private funds is true.

GIPS are voluntary performance-reporting standards. Investment managers decide whether to claim compliance, and if they do, they must follow the full set of rules. Because adoption is optional, private funds can choose to claim GIPS compliance if they want to market their performance, but there is no obligation for private funds to do so. Compliance is about marketing materials and consistency, not a regulatory mandate.

External verification of GIPS claims is optional, not required, so the existence of an independent audit is not a given.

GIPS also requires including all portfolios that meet the firm’s inclusion criteria and addresses survivorship bias; it does not guarantee that every single portfolio is included regardless of survivorship.

So the statement that GIPS is optional for private funds is true.