Can a portfolio manager take their performance track record when they switch firms under GIPS?

Question

AcadiFi · Accepted Answer

Performance portability is one of the most nuanced GIPS topics and comes up frequently on the CFA exam. The short answer: it is possible but requires meeting strict conditions.

## Three Requirements for Portability

The new firm may link the ported performance to its own track record ONLY if **all three** conditions are met:

1. **Substantially all the decision-makers** from the prior firm's composite are now at the new firm (not just one portfolio manager — the team that actually drove performance)

2. **The decision-making process remains substantially intact** and independent at the new firm (same philosophy, same approach)

3. **The new firm has documentation supporting the performance** and can demonstrate the link between the prior record and the current strategy

## What "Substantially All" Means

GIPS does not define an exact percentage, but the principle is clear: if a team of five analysts and one PM ran the strategy, and only the PM moves, that likely fails the "substantially all" test. The entire investment process must have transferred.

## Practical Example — Hartfield to Stonebridge Transition

Sarah Chen ran the Emerging Markets Equity composite at Hartfield Partners for 8 years, generating a strong track record. She moves to Stonebridge Capital.

**Scenario A — Passes:**
Sarah brings her entire 4-person EM team. They use the same screening model, the same fundamental research process, and Stonebridge gives them full autonomy. Stonebridge obtains Hartfield's composite records.

**Scenario B — Fails:**
Only Sarah moves. Stonebridge assigns her three new analysts who use a different research platform. The investment process has fundamentally changed.

## Presentation Requirements

Even when portability is permitted:
- The ported track record must be clearly **labeled as prior-firm performance**
- The new firm must disclose when the team joined
- There must be no implication that the new firm generated the historical results
- Non-compliant track records from the prior firm **cannot** be ported

**Exam tip:** GIPS portability questions typically test whether the three conditions are met. Focus on "substantially all decision-makers" — it is the most common failure point.

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Can a portfolio manager take their performance track record when they switch firms under GIPS?

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