CFA Practice Question
There are 361 practice questions for this study session.
CFA Practice Question
All of the following are required by the GIPS for composite construction except for ______.
A. portfolios terminated two periods ago
B. actual assets under management
C. new portfolios
Explanation: Terminated portfolios must be included in the historical record of the appropriate composites up to the last full measurement period that the portfolio was under management.
User Contributed Comments 13
|devendra||It is required that firms composites must include actual assets under management, assets weighting are done by size. equal weighted composites are also recommended to be disclosed & all actual fee paying portfolio's must be included in atleast one composite. One NEED NOT disclose the performance of the historical performance of the portfolio's no longer managed.|
|almond||what exactly does a composite mean?|
|turtle||check related subject - it's a bit not a'propos|
|pjudin||This question is a part of part 3 - Composite Construction, which need NOT to be studied for the exam...post if its mentioned anywhere else|
|wollogo||I guess the interpreation is that terminated portfolios are not relevant for the "construction" of a new composite. However they must be included in the historical performance of the composite if they match the composite criteria.
A simple example - Lets say I only managed portfolios with domestic equities but in the past had managed a potfolio that included foreign equities. If I was seeking GIPS compliance today I would create a composite of domestic equities and exclude the terminated foreign portfolio. However had the terminated portfolio been domestic equities then I would need to include this in the historical perfromance of my composite.
Do people agree with my interpreation? Or would I have to create 2 composites, one domestic and one foreign even though the foreign portfolio was terminated prior to claiming compliance.
|jpducros||I think you cannot create composite a posteriori; otherwise you may be subjective to portfolio's performance....|
|CFunder||pg. 146 of the CFAI text - in the optional segment.|
|alester83||almond, a composite groups the performance of a set of clients for some specified period of time. it allows investors to see the managers track record|
|bergje11||Doesnt this violate survivorship bias?|
|dbedford||What if the only prior accounts that closed were not happy with performance and the only ones with you are good performance. I as an investor would like to know what your composite looks like with good and bad performance|
|sevywonder||Brutal question. This would be worded better in the Institute's materials|
|spmadoff||GIPS 0.A.10. [relevant excerpt] Firms must include terminated composites on the firm’s list of composite descriptions for at least five years after the composite termination date.|
|jstid40||Is A. wrong because one only has to include the latest year of results of a terminated portfolio?|