GIPS standards require the use of composites.
For example, if you are managing 100 accounts and one of your strategies is to invest in large cap value stocks, and you use this strategy for 70 accounts. Then these 70 accounts will form one composite. Similarly, if you have another strategy to invest in small cap growth stocks; and you use this strategy for the remaining 30 accounts. Then these 30 accounts will form another composite. You will have to report performances of these two composites separately.
For example, if you are managing funds for a charity organization and not charging them any fees, then this account should not be included because it is a non-fee paying account. Similarly, if you are managing an account for a large client, where you cannot use your discretion and the client tells you what securities to buy and sell. Then you should exclude this account because it is a non-discretionary account.
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