GIPS: Modeled Fees/ Estimated Fees?

CFA Level III Portfolio Management
#1

Hello,

Standard 2.A.4 says all returns must be calculated after the deduction of actual trading expenses…Estimated trading expenses are not permitted.

Standard 4.A.6 says firms must disclose…if model or actual investment management fees are used.

So, to clarify, TRADING expenses cannot be estimated, but MGMT fees can be modeled?

Thanks!

#2

Have exactly the same question and my understanding is that you are correct.

Anyone can chime in on this? Thanks.

#3

My understanding is that your understanding s are correct

#4

And can someone relate this to the AMC? Where estimated (performance) fees are required to be disclosed? How can these fees be calculated without an estimate of the trading expense?

#5

What’s AMC? Asset Manager Code? I have yet to revise that topic yet but would revert when I subsequently review it.

#6

Yes. If I’m not mistaken, under the Disclosure section expected fees need to be disclosed to clients.

#7

Yes in AMC expected fees are to be disclosed. Honestly, I hate GIPS with a passion (not the idea of GIPS but studying it). To be frank, I think it’s a self promoting topic for CFA to test us on.

#8

Hey man, not sure if this answers your question. From CFAI EOC Question 3

According to the recommendations and guidance of Section F(4d) of the Asset Manager Code, managers must disclose to prospective clients the average or expected expenses or fees clients are likely to incur, and to existing clients the actual fees and other costs charged to them.

Think the distinction is between actual and prospective clients.