Fkn GIPS ... Gross OR Net, or Net? net, direction, reference, recently

cfa10yrplan

I was like 99% sure I read that you can do either one, as gross is only "recommended" (of that im 100% sure, just re-read it).

But recently I had a buddy who swears you MUST show net of fees return, and I think i encountered a question that was kind of vague but pushed you in that direction. I searched the text high and low and found no explicit statement to either way, but it did reference showing both gross and net, as if it was permissible either way.

Can someone confirm, with reference, if you can show either or? [exuding PE which is gross AND net SI-IRR]

Colum

So I redid all of GIPS and of course couldn't find a conclusive solution.

Here is my interpretation though. EOC 26 lists a company that reports gross of fees and asks you show all of the omissions and errors they have. One of the omissions and errors is not that they reported gross of fees and not net of fees.

Sample Company 2 in Actual GIPS Appendix reports gross returns only and is used as a template.

Sample Company 8 uses net only.

Answer is you can do either as we originally suspected.

I firmly believe CFA Sample was not written by CFAi.

liangfeng

I think my take on that, is it was just a poorly designed question.

I believe the intent was that since the answer choices force you into making one of them a recommendation versus requirement, we get confused and interpret it as required in general.

I think what they are doing is saying, hey... you have to have one of them, and since we know gross is recommended and not required, we pick net.

Takeaway: In isolation either, if you have to pick one or the other that is required, net.

thommo77

I just did the CFAI sample exams and I have to agree with Paraguay. Question 23 of sample 2 mentioned that the column "net of fee" is required while the column "gross of fee" is only recommended. GIPS is freaking confusing!

bboo

Paraguay Wrote:
-------------------------------------------------------
> smokin'hot Wrote:
> --------------------------------------------------
> -----
> > AMC- disclose both- REQUIRED
> >
> > GIPS- you can present either, but gross is
> > RECOMMENDED
> >
> > GIPS, P/E: net of fees and gross of fees
> SI-IRR
> >
> > Wrap Fees/SMA- must present returns after
> > deduction of all BUNDLED FEES (this makes sense
> if
> > you think about it)
>
>
> This was everyones take, however have you taken
> the sample exam? The question specifically says a
> violation took place because they did not report
> net of fees returns.


Was there supplemental information to convert from gross to net?

nannan66

Paraguay. Dude. Then I have no idea.

bodhisattva

No it specifically dealt with a mid cap gips compliant composite.

Unforseen

Paraguay, not sure which question you are referring, but if it was asking about AMC< it would have been a violation, yes.

bpdulog

For the exam I am sticking to what smokin'hot said. Straight from the book.

Valores

smokin'hot Wrote:
-------------------------------------------------------
> AMC- disclose both- REQUIRED
>
> GIPS- you can present either, but gross is
> RECOMMENDED
>
> GIPS, P/E: net of fees and gross of fees SI-IRR
>
> Wrap Fees/SMA- must present returns after
> deduction of all BUNDLED FEES (this makes sense if
> you think about it)


This was everyones take, however have you taken the sample exam? The question specifically says a violation took place because they did not report net of fees returns.