Vol I Reading 6 pg 207 AMC Investment Process and Action 5. When managing a portfolio or pooled fund according to a specific mandate strategy or style: a. Only take investment actions that are consistent with the stated objectives and constraints of that portfolio or fund. …clients need to be able to evaluate the suitability of the investment funds or strategies for themselves. Subsequently, they must be able to trust that Managers will not diverge from the stated or agreed-on mandates or strategies. When market events or opportunities change to such a degree that Managers wish to have flexibility to take advantage of those occurrences, such flexibility is not improper but should be expressly understood and agreed on by Managers and clients. Best practice is for Managers to disclose such events to clients when they occur, or at the very least in the course of normal client reporting. Two important points in that. First that clients judge suitability on their own if you are managing to an objective, and second that if it is disclosed and not a material change but a market event or opportunity, you don’t need to inform prior to implementing, though best practice is to disclose at the least during normal reporting.
+1
I think you’re reading from the wrong paragraph b. provide adequate disclosures and information so investors can consider whether any proposed changes in the investment style or strategy meet their investment needs In order to give clients an opportunity to evaluate the suitability of investments, Managers need to provide adequate informain to them about any proposed material changes to their investment strategies or styles well in ADVANCE of such changes. Clients should be given enough tiem to consider the proposed changes and take any actions that may be necessary. If the Manager decides to make a material change in the investment strategy or style, clients should be permitted to redeem their investment if desired, without incurring any undue penalties my question is, how can a quarterly report of past changes to the style be consistent with the code above?
If you dislose that you have a fund that switches between two differenent styles beforehand then you have told them upfront. If you decide to go to a third style then that would have to be disclosed before hand. IMO…
I fully agree with the below. Should be done in ADVANCE. Jscott24 Wrote: ------------------------------------------------------- > I think you’re reading from the wrong paragraph > > b. provide adequate disclosures and information so > investors can consider whether any proposed > changes in the investment style or strategy meet > their investment needs > > In order to give clients an opportunity to > evaluate the suitability of investments, Managers > need to provide adequate informain to them about > any proposed material changes to their investment > strategies or styles well in ADVANCE of such > changes. Clients should be given enough tiem to > consider the proposed changes and take any actions > that may be necessary. If the Manager decides to > make a material change in the investment strategy > or style, clients should be permitted to redeem > their investment if desired, without incurring any > undue penalties > > my question is, how can a quarterly report of past > changes to the style be consistent with the code > above?
well let’s say that the client does not agree with the timing of the switch and wants out can he do that under this situation?
Jscott24 Wrote: ------------------------------------------------------- > well let’s say that the client does not agree with > the timing of the switch and wants out > > can he do that under this situation? If he wants to be in control of the timing of the switch then he shouldn’t be giving up control to a fund manager that says they are going to do the switching.
okay, A and B of this code are completely conflicting this is bs
I posted a. and got tired of typing. b is the wrong section. Paragraph b. deals with “material changes.” …you are a balanced fund by prospectus then you decide to go all stocks, or you are a large cap and you decide to go heavy small cap. If you are large blend and describe the strategy to alter that mix to take advantage of “market events or opportunities” that is paragraph a and no permission is needed as it is previously agreed upon.
In advance.
wasnt it value and growth strategies and they were investing exclusively i.e. not market-oriented, to me thats a material change. whatever its 1 question and we’ll never know the answer
Jscott24 Wrote: ------------------------------------------------------- > okay, A and B of this code are completely > conflicting > > this is bs I don’t think they are Jscott and I am not trying to be a PITA here. Let’s say instead you are a value fund manager that mainly deals with Large caps and this has been disclosed to your clients upfront. For some “market” reason you want to delve into small caps (and this has been disclosed up front too). You could do this if you told your clients when you did it or in the normal course of reporting. BUT, if you decide to becoming a merger/arb fund one day then they would have to know about it in advance because they may have been using you for value exposure in their strategic asset allocation. Does that makes any sense? Edit: crossed with slouiscar and Jscott. Ignore my post.
mwvt9 Wrote: ------------------------------------------------------- > Jscott24 Wrote: > -------------------------------------------------- > ----- > > okay, A and B of this code are completely > > conflicting > > > > this is bs > > I don’t think they are Jscott and I am not trying > to be a PITA here. Let’s say instead you are a > value fund manager that mainly deals with Large > caps and this has been disclosed to your clients > upfront. For some “market” reason you want to > delve into small caps (and this has been disclosed > up front too). You could do this if you told your > clients when you did it or in the normal course of > reporting. > > BUT, if you decide to becoming a merger/arb fund > one day then they would have to know about it in > advance because they may have been using you for > value exposure in their strategic asset > allocation. > > Does that makes any sense? Agree with this, and maybe its bad memory but I dont remember language stating they tilting to the market, I believe they were talking about directional changes that flipped the strategy on its side.
ps glad to see some of you guys are coming out 
Jscott24 Wrote: ------------------------------------------------------- > > > Agree with this, and maybe its bad memory but I > dont remember language stating they tilting to the > market, I believe they were talking about > directional changes that flipped the strategy on > its side. Yeah that is why there is debate about this question and I agree it makes it tricky. The strategy in the beginning was one that changes. But I believe that they did say they changed when market opportunities presented itself (in the managers opinion), which goes along with section a. It doesn’t appear to me they ever changed the overall mandate of the fund, which appears to be where section b applies.
I’ll combine hope and fear and give myself a -0.5
Jscott24 Wrote: ------------------------------------------------------- > I’ll combine hope and fear and give myself a -0.5 me too.
i choose that they needed to be notified in advance as well. precisely because i felt it was a drastic change in style and that the clients needed to have an opportunity to get out if they desired… i didn’t reember the whole thing about it being in the prospectus… not sure how i glossed over that.
i chose “report quarterly”. The examples cited in the text that require advance disclosure pertain to a manager with a specific mandate changing his mandate, i.e. a growth manager switching to value. The issue is not changing investment style, but changing your mandate, which clients have determined is suitable for them. This manager’s mandate was to move back and forth between styles, and therefore, he did not change his mandate and would not need to give advance notice. The quarterly reporting would be adequate. just my thoughts.
Unless every factor momentum/rotating quant fund is in violation of AMC, quarterly should be fine.