Performance Perspectives Blog

When is an account, not an account?

by | Jul 1, 2010

I just got a question from a client. They often bundle accounts into a “household” for reporting purposes. And, it’s the household which actually reflects their strategy; that is, the individual accounts may have pieces of the strategy, but the actual strategy is acted upon at the household level. And so, how do we handle this for GIPS(R) (Global Investment Performance Standards) purposes?

In this case it would be appropriate to treat the household as the account, even though it may not legally be an account; it’s a “virtual” account, yes? THIS is what you’re managing, and you’re using the pieces because individually you may not be able to execute your strategy. And therefore, the pieces wouldn’t be in a composite by themselves, but the entire household would be. Make sense?

And, the firm’s policies and procedures should reflect this, too!

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