In order to build his client base, Kostecka prepares performance information to show prospective clients. He includes the firm’s composite performance based on similar discretionary client portfolios that are in compliance with the GIPS Standards. In addition, Kostecka prepares his own composite performance, including all accounts he manages. This presentation includes Nathoo’s account assuming she had sold her shares of Jabbertalk. Along with his performance record, Kostecka provides a footnote disclosing the following language: “If your account is managed on a discretionary basis, you might expect results similar to those shown above.”
Kostecka’s performance presentation most likely conforms to CFA Institute Standard III(D)–Performance Presentation with regard to:
- disclosure in the footnote.
- composites representing similar discretionary investment portfolios.
- fair and accurate representation of performance.
Please refer to this part of core reading also if you can share the explanation of this question i will share a audio explanation of the same.