What are fee-paying discretionary portfolios ?

[saurya_s]

Hi all,
What are fee-paying discretionary portfolios ? Why they have to be included in GIPS? Does non discretionary portfolio also exist and they do not form part of GIPS?
S

 

[finfan]

I think I had read somewhere that both “fee-paying” discretionary & non-discretionary portfolios have to be included in a composite that claims GIPS compliance….
Pls correct me if I am wrong..

 

[njblain]

Non-discretionary portfolios are effectively “execution only”, where the client is instructing trades. Not really relevant to show results of these portfolios as they show nothing about the skill of the firm.
GIPS states that fee-paying discretionary portfolios must be included. Non-fee-paying discretionary portfolios MAY be included in composites. Non-discretionary portfolios are specifically excluded (for the above reason). When stating “total firm assets”, this includes non-fee-paying as well as non-discretionary.

 

[mcf]

Keep in mind that, according to GIPS, you must disclose if you include non-fee paying discretionary accounts with the fee paying accounts in your composite.