May be it is late, but reading this stuff, someone tell me how the recommendation 5.B.4 and 5.B.5 are different. All I can see is that one states using monthly returns, but how else would you annualize it? using daily returns, hello~. 5.B.4 For each period for which an annualized EX-POST STANDARD DEVIATION of the COMPOSITE and the BENCHMARK are presented, the corresponding annualized return of the COMPOSITE and the BENCHMARK SHOULD also be presented. 5.B.5 For each period for which an annualized return of the COMPOSITE and the BENCHMARK are presented, the corresponding annualized EX-POST STANDARD DEVIATION (using monthly returns) of the COMPOSITE and the BENCHMARK SHOULD also be presented.
Perhaps this is the language of “Standards”. 1) The two are only recommendations; 2) No specific date like 1/1/2011; 3) Ex-post SD and the corresponding annualized return always go together. Correct me if I’m wrong.
Yes, they are only recommendation but unclear one, to say the least. I realize that many of the disclosure requirements are like recommendations in that they do not ever need to be listed in order for a company to be GIPS compliant. What I mean is that many of the required disclosures have a contingent language “when,” “if,” “significant,” “material,” etc. You get the drift. As I see it there are only about dozen or more ones that must be detectable on the exam. The one that seems to stomp me is the 4.A.11 - “firms must disclose that the firm’s list of composite descriptions is available upon request.” First, I looked at the 2 compliant example from 2010 GIPS appendix A and noticed there is no mention of 4.A.11 on the compliant version. Second, doesn’t the standard only apply if the firm has more than one composite? Since, most of the examples only show one composite anyway, why does this ever need to be disclosed on the sample composite? Any thoughts are appreciated.