GIPS specifies treatment of bundled fees. Can someone give an example of bundled fees?
A bundled fee is one that combines multiple fees into one bundled fee. Bundled fees can include any combination of management, transaction, custody and other administrative fees. http://www.cfainstitute.org/aboutus/press/release/04releases/20040106_00.html
Thanks, Bankin!
I think an example would be a fund manager that uses a wrap fee. In this structure all of the fees (custodial, management and trading) are all bundled into one overall fee and charged quarterly. Not positive though.
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thanks, mwvt. I have much better picture now.
Can you remind me of how GIPS treats this? I think you have to break out direct trading costs or, if you can’t, you have to include the entire amount. Is this just a disclosure?
you are correct. that’s covered in composite return calculation methodology.
Thanks.
mwvt9 Wrote: ------------------------------------------------------- > Can you remind me of how GIPS treats this? > > I think you have to break out direct trading costs > or, if you can’t, you have to include the entire > amount. > > Is this just a disclosure? I have a recurring event on my outlook calendar that reminds me to list the 26 GIPS disclosures. The two disclosures relating to bundled fees are: 1. Bundled fee portfolio assets as a percentage of the composite, for each annual period shown 2. Fee types included in bundled fees (when a composite contains bundled fees)
Good idea Bankin.
Looking at the fourth paragraph on p257 for GIPS (reading 49)… text seems to say deduct the entire bundled fee for both “gross” and “net” of fee calculations. I would think you would only deduct for the net calc, and include in the gross calc? Am I missing something, or mis-reading? Thanks and good luck! C Jones
If transaction costs are included in bundled fees and cannot be broken out the entire bundled fee must be deducted in gross of fee calculations. Estimated transaction costs are not permitted.