'CLAWBACK: The payback of previously earned ...FEES because of subsequent underperformance.'
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
- This term is new in the GIPS although it is a common practice in the investment industry, particularly in the alternative investments sector.
- Fun Fact – It appears five (5) times in the Exposure Draft, including that in the definitions section.
- 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.