AM MOCK subjective BS

[defacto]

2016 AM Mock Q3
From the ethics item set…
[question removed by moderator]
I went with A, and the correct answer was B. Why? “Standard III(D): Performance Presentation requires firms to provide credible performance information to clients and prospective clients as well as to avoid misstating or misleading clients and prospective clients about the investment performance of firms. A single composite that includes all client portfolios, regardless of investment objectives (which would likely be different for the retail and institutional clients) could be considered to be misleading. The standard does not require firms to be GIPS compliant. Firms not in compliance with the GIPS standards, however, should present the performance of a weighted composite of similar portfolios, rather than using a single representative account or all accounts with different non-similar portfolios.”
Went back to the text, to find that last sentence, stopping at “representative account”. Never is there a prohibiltion on showing composites aggregating across the client base. So is that it then? CFAI’s just going to be rewriting the material as it sees fit when it grades the live exam as well?

 

[MrSmart]

accounts with different non-similar portfolios
different non-similar
different






























































non-similar

 

[licky]

I personally didn’t see a problem with this question. The explanation was decent I thought.
“Never is there a prohibiltion on showing composites aggregating across the client base” - you can only aggregate them if they have similar investment mandates, which is not the case here.
Hope this helps

 

[cbjohn1]

licky wrote:
I personally didn’t see a problem with this question. The explanation was decent I thought.
“Never is there a prohibiltion on showing composites aggregating across the client base” - you can only aggregate them if they have similar investment mandates, which is not the case here.
Hope this helps

What did you see in the question that indicated they didn’t have similar investment mandates? I didn’t see anything in the text to suggest that they had different mandates. Especially since the more obvious answer was “C” since adopting GIPs is recommended … which is what the question asked. Question didn’t asked for what is required … it asked for what is recommended.

 

[licky]

Wanted to reply earlier but AF was in read-only - but in case you’re still wondering this info was given in the first few lines.
“Miriam Bukenya, CFA, is the head of compliance at Jacaranda Asset Management, a manager of both retail and institutional portfolios…” therefore it’s not appropriate to include everyone in that composite