GIPS_Fees and Expenses includes, custody, correct, returns, entire

JRossSter

1. “Returns must be reduced by the entire bundled fee that includes the direct trading fee… when calculating gross-of-fee returns” So is this requirement applied to both gross-of-fee return and net-of-fee return?
2. Indirect trading trading expenses and custody fees are not reduced when calculating returns? Is that correct?
Thank you

jarobi04

1 - Yes. Net-of-fee returns are gross-of-fee returns minus asset mgmt fees.
2 - Custody fees are not included. Only actual trading expenses are decucted.

strikethree

I have an additional source of confusion id like to tack on to this thread:
1.) GIPS lets you use either gross or net, gross is “Recommended”
2.) It appears the asset manager code requires both?
Is this correct?

kkn006

About (1), Schwerser book 5 P.190 says:” When calculating gross-of-fee return, returns must be reduced by the entire bundled fee that includes direct trading expenses”
So why do we have to deduct bundled fee to come up with Gross-of-fee returns? I think net-of-fee returns would make more sense.

fishmarket

Gross-of-fee returns do not include the inv mgmt fees.