Total firm assets
Under GIPS, the fair value of all the discretionary and non-discretionary assets a firm manages, including those in no composite. Reported so a composite's size can be seen against the whole firm.
Where you will meet it
Total firm assets appears in 4 learning outcomes on the CFA syllabus. A few of them:
- Explain the basic requirements for claiming GIPS compliance, including how the firm is defined and how it defines discretion
“The first decision is how the firm is defined: it must be the entity held out to the public, such as an independent adviser or distinct business unit, and that definition fixes total firm assets, which include every portfolio, discretionary or not.”
- Explain what makes a portfolio discretionary for composite construction and, from a set of facts, judge whether a given portfolio is likely to qualify
“Such portfolios are excluded from composites but still counted in total firm assets.”
- Explain what the GIPS standards require in presenting and reporting performance
“For each annual period it presents composite and benchmark returns, composite assets, and total firm assets or the composite's share of them, plus the number of portfolios when there are six or more at year end and a measure of internal dispersion when at least six were present for the full year.”
- Discuss why firms seek GIPS verification, what it covers and how it is carried out
“The verifier tests the firm definition, total firm assets, composite definitions and membership, samples portfolios, recalculates returns and reviews records, then issues a verification report.”
See also
Practise it
Practise total firm assets until it is automatic: questions that explain every wrong option.
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