GIPS

CFA Level I
#1

Does a firm have to use non-discretionary and non-fee paying accounts??

#2

For asset level, Yes.

#3

but not for composite?

#4

Composites are fee paying non discretionary.

#5

you mean fee paying and discretionary non-fee paying and non-discretionary are only for assets

#6

smartrisk Wrote: ------------------------------------------------------- > you mean fee paying and discretionary > > non-fee paying and non-discretionary are only for > assets Yes. I’m losing it!

#7

Can you elaborate? What’s the difference between the “levels”? I thought the composites make up total assets.

#8

Isnt it fee paying discretionary for composites? Please correct me if I’m wrong…

#9

Fee paying discretionary is for composite performance (ie they only want the performance of the accounts the firm managed personally). But, AUM is a measurement of all assets non fee paying non discretionary. These are excluded from composites since it is not an indication of the firms performance if one client is a retired options guru.

#10

ditchdigger2CFA Wrote: ------------------------------------------------------- > Fee paying discretionary is for composite > performance (ie they only want the performance of > the accounts the firm managed personally). > > But, AUM is a measurement of all assets non fee > paying non discretionary. These are excluded from > composites since it is not an indication of the > firms performance if one client is a retired > options guru. makes sense. why not include “non-fee paying discretionary”? (What kind of account what that be anyway? Prop trading?)

#11

makes sense. why not include “non-fee paying discretionary”? (What kind of account what that be anyway? Prop trading?) I have no idea. I just reread that section in gips and it states fee paying discretionary is included in the composite.

#12

ditchdigger2CFA Wrote: ------------------------------------------------------- > fee paying discretionary is included in the composite. I will now repeat this sentence 50 times and go a little bit shopping. I hope there will be a question in the exam. 42) What kind of accounts are included in composites according to GIPS? a) fee paying non-discretionary b) non-fee paying non-discretionary c) fee paying discretionary d) non-fee paying non-discretionary

#13

a) fee paying non-discretionary is correct. I had a brain fart!

#14

umm…ditch, are you sure on that one???

#15

ditchdigger2CFA Wrote: ------------------------------------------------------- > a) fee paying non-discretionary is correct. I had > a brain fart! don’t make me go nuts :slight_smile:

#16

I’ll stay off the board today…

#17

So final answer is c) fee paying discretionary Everyone agree with this???

#18

hmmm… In the optional section on p. 147 it says that “All the firm’s actual discretionary fee-paying portfolios” have to be included in a composite. does this exclude other portfolios from the composites? any other reference? (Anyway, I do not think this should be too important, should it?) Cheers, lw

#19

Composite Construction – Requirements 1.Actual, fee-paying, discretionary portfolios must be included in at least one composite. Non-fee-paying discretionary accounts may be included. 2.Nondiscretionary accounts must not be included in a composite. source: http://www.investopedia.com/exam-guide/cfa-level-1/ethics-standards/gips-composites-verification.asp