#7 Clawback

'CLAWBACK: The payback of previously earned ...FEES because of subsequent underperformance.' Click to Tweet

Full Definition

This term is defined as The repayment of previously earned PERFORMANCE-BASED FEES resulting from subsequent underperformance.” in the GIPS 2020 Exposure Draft.

Key Points about This Term

  1. This term is new in the GIPS although it is a common practice in the investment industry, particularly in the alternative investments sector.
  2. Fun Fact – It appears five (5) times in the Exposure Draft, including that in the definitions section.
  3. Possible Evolution under new Standards – Here to stay as it has even been further consolidated as a required disclosure when providing a Performance-Based Fee Description.