GIPS EOC Q17 - Long or short period below minimum asset level

CFA Level III Portfolio Management
#1

Q17’s answer is to “exclude the Hartford portfolio from the core-plus fixed income composite for the period it was below the minimum asset level.”

In the Kaplan note, “Because portfolios may drop below the minimum for a short period , the IPC Guidance Statement on Composite Definition recommends that a policy be put in place to identify percentage or period of breaches after which a portfolio should be removed from the composite.”

Q17 states the portfolio is below minimum level for nine month. So, I guess we consider that a long period? But how do we know how long is a long period instead of short period if no definition is mentioned like this question?

Thanks!

#2

9 months is long in my opinion. The point is that the period length should be disclosed I believe by the firm. I don’t believe CFAI would force you to make that determination

#3

generally anything below 1 year is considered short for multiple purposes in the industry, they’ve mentioned that in previous levels as well. There is no standard but 1 yr seems to be a good starting point.

#4

Any guidance on what timeframe is considered long/short?

#5

If it comes up in a question on the real exam, they’ll tell you what’s long or what’s short.

The purpose of the exam isn’t to get you to guess where the threshold is. The purpose is to determine if you know what to do when it’s clearly long or clearly short.