- "actual": a real account; exclude back-tested results, model portfolios, and hypothetical portfolios (you can show non-actual as supplemental information)
- "fee paying": an advisory fee is paid to the manager (you can include non-fee paying, with additional disclosures)
Since we typically think of it in light of legal discretion, this is often where firms stop. However, we're talking beyond the realm of legal; legal is assumed (that is, the firm has the ability to execute trades on behalf of the client). We're talking "GIPS" discretion. And so, WHAT DOES THIS MEAN?
I am preparing for The Spaulding Group's upcoming GIPS Fundamentals workshops and have come up with the following:
- Portfolios for which the firm is able to execute their strategy
- Portfolios whose composition and returns are representative of the composite’s strategy
- Portfolios for which the clients have not imposed restrictions or requirements that impede the manager from fully executing their strategy, such that the results will be representative of the strategy
- Portfolios that have restrictions such that the manager isn't able to fully execute their strategy
- Portfolios whose composition and returns are not representative of the given strategy.