GIPS for CIPM Level 1: What’s Tested Most + Exam-Style Examples
- Kateryna Myrko
- 1 day ago
- 4 min read
For CIPM Level 1 candidates, the GIPS content is not a “nice-to-know.” It’s the professional standard-setting backbone for how performance is calculated, how composites are built, and how results are presented to prospects and clients. Level 1 tests GIPS at the implementation-and-application layer: definitions, required fundamentals of compliance, composite construction mechanics, and what belongs in a compliant report. GIPS for CIPM Level 1
Where GIPS sits in the Level 1 blueprint GIPS for CIPM Level 1
Level 1 is a 3-hour, 100-question multiple-choice exam. The “performance presentation” domain is a meaningful portion of Level 1 weighting in the official CIPM competency map, and it explicitly includes evaluating policies and practices against GIPS.
The official Level 1 topic outline lists GIPS learning outcomes under “Investment Performance Presentation,” including firm definition, input data, valuation hierarchy, fees/expenses, return calculations, composite construction, composite returns, required report elements, and differences between firm and asset owner compliance.
What’s tested most in practice (high-frequency GIPS concepts)
Below are the areas that most often drive exam questions because they are core compliance mechanics and common sources of real-world mistakes.
1) Why GIPS exists and who it applies to
Expect concept questions on the purpose of GIPS and the stakeholders it serves. Know the “why” (comparability, credibility, fair representation) and the “who” (firms; and separately, asset owners under their provisions).
2) Fundamentals of compliance and governance discipline
Level 1 expects you to recognize the “compliance posture”: documented policies/procedures, consistent application, and controls around calculation + reporting. Related: the standards describe verification as independent firm-wide testing and note that being verified is considered best practice (and “strongly recommended”).
3) Composite construction logic (this is the exam’s favorite)
The exam repeatedly comes back to composites because they are central to fair presentation.
Composite definition and rationale: A composite aggregates portfolios managed to a similar mandate/objective/strategy; meaningful composites support comparability.
Discretionary vs. non-discretionary: You must be able to decide whether a portfolio belongs in a composite based on discretion and the composite’s mandate.
Inclusion/exclusion timing and switching: Know the rules around when portfolios enter/leave, what happens when a composite loses all member portfolios, and how track records must be handled.
4) Valuation and input data
GIPS is strict about fair value: portfolios must be valued per fair value definition and consistent valuation policy; if estimated values are used, the firm must treat them as best approximations and assess/adjust when final values arrive.
5) Fees, expenses, and “gross vs. net” labeling
You should be fluent in the required treatment and labeling of fees/expenses and the requirement to clearly label returns as gross-of-fees or net-of-fees (where applicable).
6) What must appear in a compliant report and how it’s distributed
Level 1 expects familiarity with the idea of a GIPS Composite Report and what it’s for, plus distribution/update mechanics (e.g., keeping reports updated through the most recent annual period end within prescribed timelines) and correcting material errors.
Exam-style examples (with answer logic)
These are practice questions written in the same decision + rule-application style you’ll see on Level 1.
1) Composite membership (discretionary test)
A firm manages Portfolio A to the composite strategy but the client contract prohibits one key investment type required by the strategy. Should it be included?
A. Yes, because it’s “similar” to the strategy
B. Yes, if performance is disclosed separately
C. No, likely non-discretionary relative to the mandate
Answer: C. Level 1 expects you to apply the “discretionary” concept to composite inclusion decisions.
2) Valuation discipline
A portfolio’s month-end price is unavailable; the firm uses the last available price as fair value but never reviews differences when final prices arrive. Is this consistent?
A. Yes, if the last price is from a reputable source
B. No, the firm must assess the difference and adjust when final values are received
C. Yes, if disclosed in the report
Answer: B. The standards require assessment of the approximation vs. final value and adjustments when final values arrive.
3) Track record break
A composite has zero member portfolios for two years, then new portfolios are added later. What must occur?
A. Continue the same track record uninterrupted
B. End the track record; if restarted later, show a clear break and do not link results across the gap
C. Keep the track record if the strategy name is unchanged
Answer: B. The composite track record must end and, if restarted, the break must be clearly shown.
4) Gross vs. net labeling
A report shows “Composite Return” but does not label it gross or net. Is that acceptable?
A. Yes, if fees are disclosed elsewhere
B. No, returns must be clearly labeled as gross-of-fees or net-of-fees
C. Yes, if the composite is institutional only
Answer: B. Clear labeling is a required presentation discipline.
5) Verification concept
Which statement is most accurate?
A. Verification tests one composite only
B. Verification is firm-wide testing of policies/procedures and their implementation
C. Verification is mandatory for compliance
Answer: B. Verification is firm-wide, provides assurance on the design/implementation of policies, and is treated as best practice (not universally mandatory).
How to use this for study efficiency
If your goal is points-per-hour, prioritize: composites (definition, discretion, inclusion timing, track-record breaks), fair value valuation, fees/net vs. gross labeling, and what a compliant report must contain/do—because those map directly to the Level 1 learning outcomes and the standards’ most operational requirements.
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