Do we have to include all the discretionary & non discretionary porfolios? or only the (fee paying) discretionary’s? schweser contradicts itself in the answers of exam 2 Q8, and exam 3 Q6 (both from volume 1) I need help!!
you MUST include all fee-paying discretionary. You MAY include no-fee discretionary. you CANT include non discreationary
I copy that!
For calc total asset, you should include everything. for composite construction, you should exclude non disc, may incl non fee paying.
krishna1 Wrote: ------------------------------------------------------- > For calc total asset, you should include > everything. > > for composite construction, you should exclude non > disc, may incl non fee paying. Are you sure Krishna? I think this is a mistake from Schweser as it contradicts itself. I believe you CAN’T include non discretionary assets as total firm assets. Comments on this?
YOu can include Non-Discretionary in total firm assets, they just can’t be in a composite.
I dont have schweser. it is from GIPS standardS: 0. FUNDAMENTALS OF COMPLIANCE 0.A Definition of the Firm — Requirements 0.A.1 The GIPS standards MUST be applied on a FIRM-wide basis. 0.A.2 FIRMS MUST be defined as an investment firm, subsidiary, or division held out to clients or potential clients as a DISTINCT BUSINESS ENTITY. 0.A.3 TOTAL FIRM ASSETS MUST be the aggregate of the MARKET VALUE of all discretionary and nondiscretionary assets under management within the defined FIRM. This includes both fee-paying and non-fee-paying assets.
Great, so % of Total firm assets represented by composite is a pointless figure - Total firm includes non-D and composire can’t. Right, that’s it - I’m going to watch bladerunner
Non-discretionary can be in a composite…but a composite with other junk in it. Not a composite thats representative of the overall strategy
cfacfacfa Wrote: ------------------------------------------------------- > Non-discretionary can be in a composite…but a > composite with other junk in it. Not a composite > thats representative of the overall strategy umm wtf? non-disc cannot be in composite. You can ofcourse disclose those returns separately but they cannot be in a composite
There basically placed in a “restricted” composite…even on the mock answer…it said something about how those non-discretionary accounts can go into a composite that hold alcholo, gambling restricted accounts
Nice - well that sorts out the % issue. Thks
jpd Wrote: ------------------------------------------------------- > Great, so % of Total firm assets represented by > composite is a pointless figure - Total firm > includes non-D and composire can’t. Right, that’s > it - I’m going to watch bladerunner I hope we are not mixing up composite asset (the column with period-end MV of composite) and Total firm asset size (which is either expressed directly as a column, OR indirectly through the “% of composite asset in firm total asset” column) Composite asset size is just the total asset size of the composite. So bound by what you can put into a composite, this will only include: - actual, fee-paying, discretionary portfolios - actual, non-fee-paying, discretionary portfolios portfolios (which you have to disclose its % within the conmposite, separately) Whereas the total firm asset size is just every actual asset within the firm, and as defined in 0A3, this includes: - discretionary assets - non-discretionary assets (which you never show in that GIPS performance table) Note that, as mentioned in 0A3, discret + nondiscret already covers EVERY ASSET, including fee or non-fee. Also note that since simulation portfolios are NOT actual asset, they never get included anywhere. (well, you can show it somewhere in your MARKETING material but I don’t think that has anything to do with GIPS)
just remember that percentage should off your TOTAL ASSETS
You’re quite right. I just think that having composite as % total assets is a pretty pointless figure when in aggregate they won’t total 100%. The degree to which they fail to meet 100% obviously rides on how much of the firm’s AUM are Non-D. If the latter is important enough to the business then you end up with arbitrary % figures. I think % of total Discretionary assets would be more relevant. But we’re straying here! Thks
also, a given portfolio can be in multiple composites. you cannot add all the comp figure and hope to get 100% tallying with the firm asset.
good point krishna!