Hello All, This is regarding GIPS. If I manage a portfolio of minority-owned real estate company stocks, can I put this portfolio in a: - minority owned composite AND - real estate composite? Do I have to pick one? If yes then what are the guidelines? Thanks, P
sort of a ridiculous example IMHO- and I don’t know the answer- I’m pretty sure the standards just say to keep accounts with similar/same strategy in the composite.
What does " minority-owned real estate company stocks" mean? Are the companies owned by minorities or shareholders? Perhaps all the shareholders are minorities in which case you would need to work out a pretty strange investment policy for your company. Maybe minorities own a majority in which case the portfolio is the “Minority interest in minority majority firms” which just sounds stupid and cumbersome. I just don’t get it.
i’m pretty sure you can’t put portfolios in more than one composite? (haven’t studied this recently, but…) – if you could put the same portfolio in a bunch of different composites, it would be easy to count your best performing portfolios more than once. can anyone clarify this?
Andrew and Joey, Thanks for your overly incisive questions into my feeble attempt at making up an example. Kiakaha, thanks for getting the point I was trying to arrive at. So a portfolio cannot be put into two composites? Double counting is not allowed. Makes sense. Thanks again. P
Hey, I looked this up and I think I was wrong: my interpretation of what’s in the textbook is that portfolios CAN be in more than one composite. There are lots of rules to try to stop people gaming the system though. Eg all portfolios have to be in at least one composite, you can’t switch portfolios between composites without good reason (eg a strategy change) and you can’t redefine your composites after the fact. Sorry for earlier confusion, hope this helps. I didn’t think the textbook was very clear on this though, so am interested in what other people think…
My first instinct was that they can be in multiple composites. I “felt” that I had read in the book a long time ago. I tried to go back to find it, but couldn’t. So not sure but if I were to take a guess, I would say they could be. But it may not happen often since composites are quite broadly defined.
sorry for the lack of help. These composite rules are important. Find an example EOC or something and let’s discuss that rather than your made-up ridiculous example