R33 - GIPS - CFAI Q11 - "Significant" cash flow policy?

CFA Level III
#1

Hi guys,

Could someone please provide some assistane and let me know what the difference between a

  • large cash flow policy

  • Significant cash flow policy

Also if it is mentioned somewhere clearly in the text.

Just want to try and finish GIPS a.s.a.p. and get back to the core stuff :slight_smile:

Thanks in advance.

#2

Large cash flow - “level at which the firm determines that an external cash flow may distort performance if the portfolio is not valued.” A large CF should be less than a significant CF and the portfolio stays in the composite. The only effect is during the composite performance calculation where any portfolio with a large CF is valued on that date. Large CF policies are mandatory.

Significant cash flow - “level at which the firm determines that a client-directed external cash flow may temporarily prevent the firm from implementing the composite strategy, thereby causing the portfolio to no longer be representative of the composite strategy.” A significant CF policy is optional, the level should be higher than a large CF, and the portfolios are temporarily removed from the composite.

#3

impressive smores

#4

Thanks @smores