GIPS - Compostie gross vs net of fees

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bern

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Hi,
In one question of sample (web link from CFA Institute), the answer said that for a composite, the presentation of net of fees performance is REQUIRED while gross of fees performance is RECOMMENDED.
Is is correct ? I thought it was up to the company to decide which type of performance to be presented.
Thanks,
Bern
 
According to Asset Manager Code - returns both gross and net of fees are required (Schweser Volume 1, Page 121)
 
bern Wrote:
——————————————————-
> Hi,
>
> In one question of sample (web link from CFA
> Institute), the answer said that for a composite,
> the presentation of net of fees performance is
> REQUIRED while gross of fees performance is
> RECOMMENDED.
>
> Is is correct ? I thought it was up to the company
> to decide which type of performance to be
> presented.
>
> Thanks,
>
> Bern
Under GIPS I thought either is acceptable but must be clearly disclosed and labeled.
 
june2009 Wrote:
——————————————————-
> bern Wrote:
> ————————————————–
> —–
> > Hi,
> >
> > In one question of sample (web link from CFA
> > Institute), the answer said that for a
> composite,
> > the presentation of net of fees performance is
> > REQUIRED while gross of fees performance is
> > RECOMMENDED.
> >
> > Is is correct ? I thought it was up to the
> company
> > to decide which type of performance to be
> > presented.
> >
> > Thanks,
> >
> > Bern
>
> Under GIPS I thought either is acceptable but must
> be clearly disclosed and labeled.
That was my interpretation as well until taking the sample exam.
 
Okay here is the answer:
1) Asset manager code of conduct requires you to show gross and net of fees
2) Asset manager code of conduct is VOLUNTARY
3) GIPS gives you the option of showing gross or net (requirement)
4) GIPS recommends you present gross of fees.
Someone correct me if I am wrong.
 
Soccertom9 Wrote:
——————————————————-
> Okay here is the answer:
>
> 1) Asset manager code of conduct requires you to
> show gross and net of fees
> 2) Asset manager code of conduct is VOLUNTARY
>
> 3) GIPS gives you the option of showing gross or
> net (requirement)
> 4) GIPS recommends you present gross of fees.
>
> Someone correct me if I am wrong.
That is what the book basically says. The CFA sample exam stated returns must be reported net of fees. It was a bunch of crap.
 
Okay here is the answer:
1) Asset manager code of conduct requires you to show gross and net of fees
2) Asset manager code of conduct is VOLUNTARY
3) GIPS gives you the option of showing gross or net (requirement)
4) GIPS recommends you present gross of fees.
Someone correct me if I am wrong.
sounds right to me.
we need to make this a sticky at the top of this page.
 
GIPS is a lot stickier,
for general portfolios it recommends gross of fees (after trading expenses, before management and administrative (f.e. custodial) fees).
5.B.1 FIRMS SHOULD present GROSS-OF-FEES returns.
for Private Equity both, gross and net of fees must be reported:
7.A.21 The following items MUST be presented in each COMPLIANT PRESENTATION:
a. FIRMS MUST present both the NET-OF-FEES and GROSS-OF-FEES SI-IRR of the
COMPOSITE through each annual period end…
I recommend to read the original http://www.gipsstandards.org/standards/current/index.html
 
From the sample. “The presentation of net of fees performance and amount of firm assets (or percentage of firm assets represented by the composite) is required, while it is only recommended that gross of fees performance be presented.”
If we go by that it is definitive, but is that right?
 
The presentation requirement of net of fees performance and recommendation for gross of fees performance (annual SI-IRR) is for Real Estate Closed-End Fund Composites. Did the sample mention a RE Closed-End Fund Composite?
 
manishsd Wrote:
——————————————————-
> The presentation requirement of net of fees
> performance and recommendation for gross of fees
> performance (annual SI-IRR) is for Real Estate
> Closed-End Fund Composites. Did the sample
> mention a RE Closed-End Fund Composite?
The portfolio was mid-cap.
 
My understanding was both are required for AMC, either or was allowed for non-PE and non RE GIPS (but must be clearly labeled).
 
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