When it’s an “administrative composite.”

I just commented on a response to someone who commented on yesterday’s post, regarding “catch-all” composites. Many firms utilize “administrative” composites to keep track of accounts that aren’t in GIPS(R) (Global Investment Performance Standards) composites. For example:

• accounts below the firm’s minimum
• non-discretionary (for GIPS purposes) accounts
• accounts transitioning from one composite to another
• accounts that haven’t yet been added to a composite
• accounts that have terminated.

Administrative composites can be helpful tools to manage your compliance. However, these composites aren’t considered “GIPS composites,” meaning that you

• don’t prepare presentations for them
• have them listed in your “list of composites.”

Admin composites aren’t required, though they can be helpful.

p.s., if an account that should be in a GIPS composite isn’t, but is in an Admin composite instead, the requirement that it be in a composite won’t be fulfilled.

p.p.s., “catch-all” composites aren’t permitted. However, if the firm uses these to bring together all those accounts which are non-discretionary, that’s fine.