CFA Practice Question

There are 361 practice questions for this study session.

CFA Practice Question

Which of the following is not a correct statement concerning the creation and maintenance of composites under GIPS?
A. All actual fee-paying discretionary portfolios must be included in at least one composite.
B. Performance of the composite must be stated after investment management fees have been deducted.
C. Asset-only returns must not be mixed with asset-plus-cash returns.
Explanation: Performance can be quoted before or after management fees, as long as the method is disclosed.

User Contributed Comments 7

User Comment
jmcarr02 So take all the management fees you want...
megw I thought cash was an asset class
wollogo Compare apples with apples, shouldn't be grouping together asset-only and asset+cash returns.
sbajaj Performance must also be presented net of trading costs.
mekc why must all portfolios be included in at least one composite... where does it say that?
alester83 the GIPS standards require firm wide compliance, so they would need to be in a composite
ascruggs92 Not all accounts, all accounts that are fee-paying and discretionary. GIPS definition of discretion is different than the legal definition, allowing a manager to define account as non-discretionary if there are significant client directed investment restrictions, even if the account pays fees
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