2013 AM exam - GIPS - Benchmark

[FrankCFA]

(Extract from 2013 CFA AM Q11)

- Lux seeks long-term growth of capital by investing in a diversified portfolio of
equities across the Scandinavian region.
- Lux uses a broad Scandinavian equity market index as its benchmark.
My Question: Does the 2013 AM exam example Lux not meet the GIPS benchmark standard because it should use growth style index? Thanks.
If the composite has certain style, say value or growth, it must can’t use broad market index as benchmark from meeting GIPS requirement purpose. <- Is that correct?
Note: GIPS Provision IV.B.2.c.iii states, in part, “Verifiers must…determine that: The portfolio’s investment mandate, objective, or strategy, as indicated by the portfolio’s investment management agreement, investment guidelines, portfolio summary, and/or other appropriate documentation, is consistent with the composite definition.”

 

[cpk123]

Not sure where your questions are directed, and why you are trying to bring in GIPS into an AM question - as though you do not have enough matter to be tested in the AM, as it is.

 

[FrankCFA]

My question: If the composite has certain style, say value or growth, it must can’t use broad market index as benchmark from meeting GIPS requirement purpose. Is this statement correct? Thanks.

 

[FrankCFA]

cpk123 wrote:
Not sure where your questions are directed, and why you are trying to bring in GIPS into an AM question - as though you do not have enough matter to be tested in the AM, as it is.

You are right…i should not mix it together. Review 2013 AM now but the question make me think of GIPS requirement…

 

[Audacious]

This is called being GIPSinoid. No treatment for it yet. Effects range from confusion, euphoria, to suicidal thoughts ( unconfirmed story of a candidate who swallowed 200 BA-II Professional batteries ) . Rumor has it that Lindsey Lohan, Kanye West, Dennis Rodman, Paris Hilton, Chris Brown, Justin Bieber, and Donald Trump had read GIPS back in the days.

 

[Miamia]

maybe there’s not such index to use as a benchmark

 

[FrankCFA]

EOC Q45 says at least unambiguous, investable, and measureable. I don’t think broad market index is investable for this case.
In real world, broad market benchmark is prevailling so it all not meet the GIPS standard if the mandate objective has style tilt?

 

[daharmattan1]

Audacious wrote:
This is called being GIPSinoid. No treatment for it yet. Effects range from confusion, euphoria, to suicidal thoughts ( unconfirmed story of a candidate who swallowed 200 BA-II Professional batteries ) . Rumor has it that Lindsey Lohan, Kanye West, Dennis Rodman, Paris Hilton, Chris Brown, Justin Bieber, and Donald Trump had read GIPS back in the days.

+1
If you’re SAMURAI, you’re good. FrankCFA I think you’re killing yourself over GIPS details a bit too much. IMO not a great use of study time to stress over. Know the basics, be able to look at a return presentation and flag what’s missing or incorrect, and spend time on higher value subjects

 

[FrankCFA]

daharmattan1 wrote:

Audacious wrote:
This is called being GIPSinoid. No treatment for it yet. Effects range from confusion, euphoria, to suicidal thoughts ( unconfirmed story of a candidate who swallowed 200 BA-II Professional batteries ) . Rumor has it that Lindsey Lohan, Kanye West, Dennis Rodman, Paris Hilton, Chris Brown, Justin Bieber, and Donald Trump had read GIPS back in the days.

+1
If you’re SAMURAI, you’re good. FrankCFA I think you’re killing yourself over GIPS details a bit too much. IMO not a great use of study time to stress over. Know the basics, be able to look at a return presentation and flag what’s missing or incorrect, and spend time on higher value subjects

I got killed in 2015 Mock GIPS session(Sue Kim one ), 2/6. I try to get some weapons and fight back…

 

[kempayne]

I don’t think “long-term growth of capital” implies a growth strategy versus value. I think the focus is investing more in equities for long-term growth versus fixed-income.