Performance Attribution and GIPS

CFA Level III
#1

Thanks to everyone here for all your insightful posts. Reading through all of these have really helped to solidify my understanding of the material. As a means of saying “thank you”, I would like to offer to answer any questions that anyone has about performance attribution and/or GIPS, the two topics that I feel strongest on. Please post your questions, if you have any, and I’ll take a shot at answering them…

#2

Illiquid…show your stuff first.:slight_smile:

#3

Eh? Just post your questions, you don’t have to listen to the answers if you don’t like them!

#4

lol… 1, Are WRAP FEE Sponsor and WRAP FEE/SMA client the same thing? If not, what’s the difference? 2, Can you please explain the following from the book? Why are the sponsors discouraged to re-distribute the GIPS compliant presentation? “…(I.8.A.4.b). The intent of the last-mentioned provision is to discourage sponsors from redistributing purportedly GIPS-compliant performance presentations to prospective wrap fee/SMA clients without reducing returns by the entire wrap fee.” (P334) Thanks.

#5
  1. No. The wrap fee sponsor would be the investment advisor, who would then hire a sub-advisor to manage the actual portfolio. Client --> Investment Advisor (AKA sponsor) --> Sub-Advisor 2. The sponsor is the one that charges the wrap fee, which includes all services (investment management, trading, custody services, etc.). If there’s a sub-advisor that’s hired (or is trying to get hired) to manage part or all of the portfolio, they wouldn’t know how much the sponsor/investment advisor charges for the wrap fee - they would only know what they charge the sponsor. Let’s say a sponsor is looking for a new investment manager to manage SMAs. The IM would put together a GIPS-compliant presentation (from their perspective) to provide to the sponsor. However, this presentation shouldn’t be passed along to the sponsor’s client because it wouldn’t be net of the ENTIRE wrap fee.
#6

Thank you so much, darkstar. Really help.

#7

darkstar Wrote: ------------------------------------------------------- > 2. Let’s say a sponsor is looking for a new > investment manager to manage SMAs. The IM would > put together a GIPS-compliant presentation (from > their perspective) to provide to the sponsor. > However, this presentation shouldn’t be passed > along to the sponsor’s client because it wouldn’t > be net of the ENTIRE wrap fee. In this case, the IM here is sub-advisor ? Since you said sponsor is also an IM !

#8

great, thx

#9

AMA Wrote: ------------------------------------------------------- > darkstar Wrote: > -------------------------------------------------- > ----- > > 2. Let’s say a sponsor is looking for a new > > investment manager to manage SMAs. The IM > would > > put together a GIPS-compliant presentation > (from > > their perspective) to provide to the sponsor. > > However, this presentation shouldn’t be passed > > along to the sponsor’s client because it > wouldn’t > > be net of the ENTIRE wrap fee. > > In this case, the IM here is sub-advisor ? Since > you said sponsor is also an IM ! Yes. Think of it like this. You hire a financial advisor (AKA sponsor) to manage your wealth, who might not have the skills/expertise to manage a portfolio of securities, so the FA would go out and find an investment manager (AKA sub-advisor) with the expertise to manage an SMA.