CFA Practice Question
Jennings and Hope holds itself to its client as a firm or an entity for business purposes. It has two divisions - one manages equity and the other balanced funds. Jennings and Hope includes all fee-paying discretionary portfolios of the balanced fund division in its performance presentation. Jennings and Hope
A. is GIPS compliant.
B. will be GIPS compliant if it discloses that performance relates to the balanced portfolio division in the footnotes.
C. cannot claim GIPS compliance.
Explanation: A firm cannot claim GIPS compliance if the entire firm is not GIPS compliant. In this case Jennings and Hope have only presented the performance of one division. They cannot claim partial compliance. Either there is full compliance or no compliance. By excluding the equity division's portfolios, Jennings and Hope have rendered there performance results non-GIPS compliant.
User Contributed Comments 4
| User | Comment |
|---|---|
| jackwez | tough ethics section... |
| sh21 | omg, I am dying! |
| Magoo | Apparently you are supposed to assume that they exclude the equity fund half of the business entirely. I was assuming that they were showing it separately and were therefore compliant by showing separately. |
| moneyguy | It doesn't say they excluded the equity divisions portfolios. We don't need any more trick questions. |