S3:E9 | Marketing Rule Master Class Episode 4 - Performance | Compliance in Context

Welcome to Episode 4 of the Marketing Rule Master Class mini-series focused on performance.  In our fourth episode of the master class, moderated by Carlo di Florio, ACA Group, you will hear from Karyn Vincent, CFA Institute, Janice Kitzman, Cascade Compliance, Julia Reyes, ACA Group, and Shivani Choudhary, ACA Group, as they discuss the various Marketing Rule performance requirements including how they compare and contrast with GIPS 2020. Our panelists will provide practical advice and insights as to how best to set your compliance program up for success.  We hope you enjoy this installment of the master class series!

Show

Interview with Karyn Vincent, Janice Kitzman, Julia Reyes and Shivani Choudhary

• 3:09: Net vs Gross Performance
• 16:22: 1, 5, ads 10-year requirements
• 25:00: Related performance
• 40:03: Extracted performance - attribution
• 51:43: Hypothetical performance
• 1:07:15: Portability of performance
• 1:10:58: Recordkeeping

Quotes

4:43 – “Given that the definition of performance refers to a portfolio, I think it’s reasonable to assume that performance does not include items that are meant to be analyzed or be composed for portfolio performance.  For example, standard deviation and other risk measures are not the returns of a portfolio.”  - Karyn

12:48 – “Whatever you are providing to a prospect investor, at the end of the day would that be construed as misleading or not is the mindset you should be thinking about.” – Julia

20:31: “I am a big believer in updating GIPS report annually and just leaving them alone. [In times of market volatility] the safest approach is to include any other performance information including year-to-date returns either in other materials or maybe as an attachment to the GIPS report.  If the GIPS report is used as a standalone advertisement it has to meet all of the requirements of the Marketing Rule.  This is what many firms do now and should continue with this approach.”  - Karyn

31:57: “GIPS compliant firms will definitely have a leg up with the Marketing Rule because they will have already calculated composite returns that they too will consider meet the requirements of the Marketing Rule” – Karyn

57:49: “Every time someone turns around with [a] model, and it’s often a chain, that is being used within these platforms, you have to stop and say is it ok that I am giving this performance to people.  There is going to come a time when you say, “no.” - Julia