More GIPS / AMC reconciling long, disclosed, entirely, standard

ayodayo

I posted this earlier, but didn’t get a clear answer, so now i will include references.
AMC lets you use simulated performance so long as it is disclosed as such. (Page 279 book 1)
GIPS standard 3.A.3 “Firms must not LINK performance of simulated or model portfolios with actual performance”
[couldnt find this in the text after wasting an hour, so i found the online 2010 GIPS PDF and searched it]
So, my interpretation here, is that you can use modeled performance, so long as it is entirely modeled, and not mixed and matched with actual returns, and you clearly label it modeled.
Thoughts?

LBriscoe

agree with deriv. the important point is whether you are talking about a composite (i.e. not compliant)…and obviously you must disclose

Viceroy

1. For GIPS compliant firm, the simulated or model portfolios are not part of firm’s asset, and can’t be included in or linked to any existing composite. But the firm can include the simulated portfolios in the supplement material.
2. According to AMC, the managers can use the simulated portfolios to seek business as long as it’s fully disclosed.

cfa10yrplan

Marketing guy can use AMC compliant presentation( with full disclosure that it is simulated) , but when client asks for GIPS compliant one , he has to tell the truth and say there is no presentation yet, because composite is just formed

bkballa

Suppose you have an investment firm,
If you adopt AMC for your firm but not claim GIPS, then you can use simulated performance.
If you want to claim GIPS for your firm, then even AMC does not stop you from using simulated performance, GIPS provisions forbid you to do so.
There is no right or wrong, only depends on which rule you apply on your firm.
Please correct me if I am wrong on this. thx

Colum

correct. taking the 2009 CFA mock and actually has a q about some PM that wants to get client into a new fund. he shows client 3 yrs of *simulated* performance and discloses it as such. q asks, is this a violation… answer was NO VIOLATION. you just can’t link simulated to non or pretend simulated is the real deal is my understanding.