Reading 49: Global Investment ....mance Standards－LOS q equity, private, standards, Investment

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CFA Institute Area 3-5, 7, 12, 14-18: Portfolio Management
Session 18: Global Investment Performance Standards
Reading 49: Global Investment Performance Standards
LOS q: State and explain the provisions of the GIPS standards for private equity.

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Which of the following ratios is least likely to be shown in a performance presentation under the GIPS provisions for private equity?

A) Cumulative distribution to paid-in capital.

B) Total value to paid-in capital.

C) Total value to residual value.

D) Paid-in capital to committed capital.

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Answer and Explanation

The required ratios for presentation are: total value to paid-in capital, cumulative distributions to paid-in capital, paid-in capital to committed capital, and residual value to paid-in capital.

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The GIPS provisions for private equity require the vintage year to be presented. Which of the following best describes the vintage year? The vintage year is the year in which:

A) the composite was created.

B) capital is first drawn down from investors.

C) the first material investment was made.

D) the year in which the greatest time-weighted average capital was invested.

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Answer and Explanation

By definition, the vintage year is the year in which capital is first called from or drawn down from investors.

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Which of the following items is NOT required to be included as part of a private equity performance presentation?

A) Net-of-fees since inception internal rate of return.

B) Gross-of-fees since inception internal rate of return.

C) Capital drawn down from partners during the year.

D) Total invested capital.

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Answer and Explanation

The SI-IRR must be presented both gross and net of fees. Total invested capital must also be shown.