Policy 1: All new accounts funded with cash or securities on or before the 10th day of the month are added to the composite at the beginning of the following month. Those funded after the 10th day of the month are added at the beginning of the 2nd month after funding, or at the beginning of the calendar month after the proceeds are substantially invested in the appropriate strategy.
Policy 2: All portfolios are deemed “non-discretionary” on the date the notice of termination of the management relationship is received and removed from the composite at the end of the month of notification.
can anyone tell me what should be the correct statement for both, or which standard are related?
This relates to 1.3.9- Provisions>Composite Construction>Including and Excluding Portfolios
Policy 1 is correct.
Policy 2 is incorrect because of a subtlety.
“For a firm that reports composite performance monthly, a policy statement could read as follows:” “All new portfolios funded with cash or securities on or before the 15th day of the month shall be added to the appropriate composite at the beginning of the following month. All new portfolios funded with cash or securities after the 15th day of the month shall be added to the appropriate composite at the beginning of the second month after funding. All portfolios shall be deemed ‘non-discretionary’ on the date notice of termination is received and removed from the composite at the end of the month prior to notification. The historical performance of terminated portfolios shall remain in the appropriate composite.”https://www.cfainstitute.org/learning/products/publications/contributed/performance/Documents/gips_overview_lawton.pdf