Wrap Fee / SMA

CFA Level III
#21

Thanks !

#22

Thanks, guys. Here is a list of statements on GIPS…You can find this one the middle: “Wrap Fee/Separately Managed Account (SMA) Portfolios (PDF)” http://www.gipsstandards.org/standards/guidance/current_guidance.html =========== Here is a few points I got from it…please add more. 1) “Actually, the wrap fee is charged by a wrap fee sponsor, not the FIRM.” 2) “Wrap fee/SMA results for existing wrap fee/SMA sponsors only for the sponsor’s internal use” 3) “…when presenting a compliant presentation to a wrap fee/SMA prospective client (which includes prospective wrap fee/SMA sponsors or prospective wrap fee/SMA clients, and existing wrap fee/SMA sponsors).” – A prospective client could be an existing sponsor, which can use the GIPS compliant presentation to solicit its own clients. Note that the sponsor is a client of the firm. Make some sense now.

#23

Sometimes I think CFAI montor’s these forums and tests the subjects that is giving us fits. That being the case, can someone please describe how a protective put and covered call works?! If there was an entire item set on these two I know I’ll be sunk!

#24

protective put =Buy the stock, buy a put. Downside limited to strike - premium covered call = Buy the stock , sell a call. Upside limited to strike + premium

#25

I can never figure out the relationship between the sponsor, the GIPS “firm” and the client. I charged a wrap fees to my client but GIPS’ description of the wrap fee model seems to only exist on Mars.

#26

janakisri Wrote: ------------------------------------------------------- > protective put =Buy the stock, buy a put. > Downside limited to strike - premium > covered call = Buy the stock , sell a call. > Upside limited to strike + premium Oh wow. Thanks. Rolling eyes.

#27

these are the two sides to the Put call parity… P + S = C + X/(1+r)^T Protective Put = P +S --> long put + Long Stock. Covered Call = -C + S (ignore the X) … Sell Call, Long Stock

#28

Dammit I was trying to make a joke. Seriously lighten up folks. Covered call? Seriously!

#29

thepinkman Wrote: ------------------------------------------------------- > Dammit I was trying to make a joke. Seriously > lighten up folks. Covered call? Seriously! Lol, shows you cant make a joke on AF without people jumping to solve it :slight_smile:

#30

thepinkman Wrote: ------------------------------------------------------- > Sometimes I think CFAI montor’s these forums and > tests the subjects that is giving us fits. If this is the case, CFAI shall work actively to answer those questions raised here without certain conclusions, rather than just monitor passively and nake us spend very much time.

#31

The wrap fee/SMA sponsor is special entity, I think. Its role is not well defined, it has its own interest, it can’t claim GIPS compliant…It’s a ‘sneaky’ entity, like SPV in L2. Stay cool when we see it in the exam.