The Investment Advisor Body of Knowledge + Test Bank. IMCA

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      A. General

      1. The format of the performance report should clearly show the client what the investment results were, how the results compare with those of various benchmarks, and how much risk was incurred to achieve the investment results.

      2. Any nonconformity with the IMCA Performance Reporting Guidelines should be disclosed to the client.

      3. The consultant is responsible for providing the client with appropriate disclosure regarding potential conflicts of interest, relevant business relationships, and other pertinent considerations.

      B. Time periods

      1. Time periods presented should include quarterly, annual, and cumulative periods, market cycles, and any other time periods necessary to present an accurate and objective assessment of the investment manager's performance.

      2. To minimize time-period bias, the consultant should normally focus on longer time periods and trends, while also being mindful of short-run trends, in judging the performance of the investment manager.

      A. These asset classes would include but not be limited to: derivative securities, municipal bonds, private investments, and real estate.

      B. Performance reporting for nontraditional assets should be handled in a manner that provides the client with a reasonable and objective assessment of the portfolio's performance.

      C. Because many nontraditional asset classes involve complex investment strategies, complete disclosure of the nature and consequences of the investment strategies being used is essential.

      Section 4: Recommended Reporting and Disclosures

      A. Performance composites presented to clients should be obtained from firms that state they are in compliance with GIPS.

      B. The investment manager should provide individual performance composites that have been prepared in accordance with GIPS. The consultant should present GIPS-compliant performance composites to clients.

      C. Supplemental performance information should be identified and disclosed. At least one GIPS compliant performance composite should accompany the supplemental information.

      D. Model portfolio results should not be linked with performance composites of actual accounts for presentation to a client.

      E. A statement should be included indicating that because a performance composite is an average of two or more accounts, it does not represent the performance of an actual portfolio.

      F. When the investment manager has compiled the performance composite, this should be disclosed.

      G. Cumulative returns for the longest common term should be shown for each manager.

      H. Annual returns for each year presented should be shown for every manager.

      I. Rates of return for periods longer than one year should be presented on an annualized basis. Returns for periods shorter than one year should not be annualized.

      J. If only gross return information is presented to the client, information should be provided to enable the client to determine the impact of the manager's fee.

      K. The manager's fees should be presented.

      L. At least one appropriate risk measure should be presented.

      M. At least one appropriate market index or custom benchmark should be presented as a basis for comparison.

      N. The consultant should disclose potential conflicts of interest, relevant business relationships, or other pertinent information that might cause the consultant to have a conflict of interest.

      A. Time-weighted total rates of return should be calculated on at least a quarterly basis, using quarterly asset valuations and monthly transactions.

      B. If the investment manager is the source of the portfolio accounting data, this should be disclosed to the client.

      C. Annual rates of return for each year should be presented for 10 years or for the period from inception of the firm or inception of the investment product – whichever is shorter.

      D. A cumulative return for the period from inception of the firm or inception of the investment product to date should be shown.

      E. Rates of return for periods longer than one year should be presented on an annualized basis. Returns for periods of less than one year should not be annualized.

      F. Information should be provided to enable the client to determine the impact of the manager's fees.

      G. At least one appropriate risk measure should be presented.

      H. At least one appropriate market index or custom benchmark should be presented as a basis for comparison.

      I. The consultant should disclose potential conflicts of interest, relevant business relationships, or other pertinent information that might cause the consultant to have a conflict of interest.

      A. If sufficient history exists, one-, five-, and ten-year cumulative returns should be presented.

      B. Cumulative returns should be shown for each manager from inception of the firm, inception of the investment product, or 10 years – whichever is shorter.

      C. Performance composites presented to clients should be shown on both a gross basis (before deduction of the investment manager's fee) and a net basis (after deduction of the investment manager's fee).

      A. Time-weighted total rates of return should be calculated on at least a monthly basis, using monthly asset valuations and daily transactions.

      B. When cash flow in excess of 10 percent of the market value of СКАЧАТЬ