GIPS

[HighBall]

Does a firm have to use non-discretionary and non-fee paying accounts??

 

[ditchdigger2CFA]

For asset level, Yes.

 

[HighBall]

but not for composite?

 

[ditchdigger2CFA]

Composites are fee paying non discretionary.

 

[smartrisk]

you mean fee paying and discretionary
non-fee paying and non-discretionary are only for assets

 

[ditchdigger2CFA]

smartrisk Wrote:
——————————————————-
> you mean fee paying and discretionary
>
> non-fee paying and non-discretionary are only for
> assets
Yes. I’m losing it!

 

[martin.heidegger]

Can you elaborate? What’s the difference between the “levels”?
I thought the composites make up total assets.

 

[masteronek]

Isnt it fee paying discretionary for composites? Please correct me if I’m wrong…

 

[ditchdigger2CFA]

Fee paying discretionary is for composite performance (ie they only want the performance of the accounts the firm managed personally).
But, AUM is a measurement of all assets non fee paying non discretionary. These are excluded from composites since it is not an indication of the firms performance if one client is a retired options guru.

 

[martin.heidegger]

ditchdigger2CFA Wrote:
——————————————————-
> Fee paying discretionary is for composite
> performance (ie they only want the performance of
> the accounts the firm managed personally).
>
> But, AUM is a measurement of all assets non fee
> paying non discretionary. These are excluded from
> composites since it is not an indication of the
> firms performance if one client is a retired
> options guru.
makes sense. why not include “non-fee paying discretionary”?
(What kind of account what that be anyway? Prop trading?)

 

[ditchdigger2CFA]

makes sense. why not include “non-fee paying discretionary”?
(What kind of account what that be anyway? Prop trading?)
I have no idea. I just reread that section in gips and it states fee paying discretionary is included in the composite.

 

[martin.heidegger]

ditchdigger2CFA Wrote:
——————————————————-
> fee paying discretionary is included in the composite.
I will now repeat this sentence 50 times and go a little bit shopping.
I hope there will be a question in the exam.
42) What kind of accounts are included in composites according to GIPS?
a) fee paying non-discretionary
b) non-fee paying non-discretionary
c) fee paying discretionary
d) non-fee paying non-discretionary

 

[ditchdigger2CFA]

a) fee paying non-discretionary is correct. I had a brain fart!

 

[forumreader]

umm…ditch, are you sure on that one???

 

[ludwig.wittgenstein]

ditchdigger2CFA Wrote:
——————————————————-
> a) fee paying non-discretionary is correct. I had
> a brain fart!
don’t make me go nuts

 

[ditchdigger2CFA]

I’ll stay off the board today…

 

[HighBall]

So final answer is
c) fee paying discretionary
Everyone agree with this???

 

[ludwig.wittgenstein]

hmmm…
In the optional section on p. 147 it says that
“All the firm’s actual discretionary fee-paying portfolios” have to be included in a composite.
does this exclude other portfolios from the composites?
any other reference?
(Anyway, I do not think this should be too important, should it?)
Cheers, lw

 

[ludwig.wittgenstein]

Composite Construction – Requirements
1.Actual, fee-paying, discretionary portfolios must be included in at least one composite. Non-fee-paying discretionary accounts may be included.
2.Nondiscretionary accounts must not be included in a composite.
source:
http://www.investopedia.com/exam-guide/cfa-level-1/ethics-standards/gips...