Composites, and
what GIPS means.

You put a track record in a proposal. Somebody asks which accounts are in it, and which ones used to be.

Two things that sound identical and are not

There is a meaningful difference between maintaining composites with a time-weighted, asset-weighted methodology and claiming compliance with the GIPS standards. Firms conflate them constantly, usually in good faith, and the conflation is the source of most of the trouble in this area.

	Using the methodology	Claiming compliance
What it means	Returns time-weighted, composites asset-weighted, with no firm-wide assertion	A firm-wide assertion that every requirement of the standards is met
Scope	Can apply to some composites	Applies to the whole firm, not selected products
What it requires	Discipline and consistent calculation	Policies, documentation, error correction, disclosure, and ongoing maintenance
Verification	Not applicable	Optional but expected, performed by an independent verifier
What you may say	That composites use a time-weighted, asset-weighted methodology — without claiming or implying compliance	That the firm claims compliance — with the required disclosures attached

Saying the second when only the first is true is a marketing problem that becomes a regulatory one. Saying the first plainly is honest and, for most firms, sufficient.

What a composite is for

A composite groups accounts managed to the same strategy so that a track record describes the strategy rather than a flattering account. That is the whole point. Selecting the good accounts is precisely what composites exist to prevent.

Which means the hard part is not the arithmetic. It is the discipline of inclusion: every discretionary account managed to that strategy, added in a defined way, removed in a defined way, with the reasons recorded.

Where firms come unstuck

Accounts that drifted. A household with a large legacy holding is managed to the strategy in principle but not in practice. Does it belong? The answer must be a policy, not a judgment call made each quarter.
Terminated accounts. Removing them from history is survivorship bias. Keeping them is correct and makes the numbers look worse.
Restarted records. A platform change resets the series, and the new one begins on a good day.
Fees. Gross and net presented inconsistently, or a model fee applied where an actual fee should be.

The test that finds most problems: could you explain, from records rather than memory, why any single account is in or out of a given composite?

Why it is worth doing even without a claim

Three reasons that have nothing to do with compliance. It gives you an honest answer to what your strategy has done. It makes performance comparable across time when your platform changes. And it is one of the first things examined during due diligence when a firm is sold — a firm that can produce clean composites is priced differently from one that cannot.

Our own position, stated plainly

Composites on our platform use a time-weighted, asset-weighted methodology, computed from the same records the trades were executed against. We do not claim GIPS compliance, and any provider telling you the distinction does not matter is telling you something useful about how they read rules generally.

Questions this did not answer? Ask them directly — that is what the twenty minutes is for.

Schedule a call to see for yourself

Composites, and what GIPS means.