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Standard III (D) - Performance Presentation

The members must ensure that the investment performance being communicated to the clients is fair, accurate, and complete.

Guidance

  • The CFA members should not misstate performance or mislead clients about investment performance
  • The CFA members should not misrepresent past performance
  • The CFA members should provide complete performance information about any fund or portfolio
  • The CFA members should not state or in any way imply the ability to achieve returns similar to returns achieved in the past

Examples of Violation

  • Example 1: An investment manager reports to his client that they can expect a 20% growth in the next year. This calculation is based only on the past two years’ performance of the fund. In their disclosure they should have mentioned that this forecast is based on only past two years’ performance.
  • Example 2: An investment firm claims compliance with the GIPS standards, but the return calculations are actually not as per the requirements of GIPS standards.
  • Example 3: While promoting an investment product, the manager promotes to clients by showing the performance results for a certain period. The performance results are actually simulated, but this information is not disclosed to the clients.
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Standard III (C) - Suitability

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Standard III (E) - Preservation of Confidentiality

01
Seven Standards of Professional Conduct
02
Standard I (A) Professionalism - Knowledge of the Law
03
Standard I (B) Professionalism - Independence and Objectivity
04
Standard I (C) Professionalism - Misrepresentation
05
Standard I (D) Professionalism - Misconduct
06
Standard II (A) - Material Non-public Information
07
Standard II (B) - Market Manipulation
08
Standard III (A) - Loyalty, Prudence, and Care
09
Standard III (B) - Fair Dealing
10
Standard III (C) - Suitability
11
Standard III (D) - Performance Presentation
12
Standard III (E) - Preservation of Confidentiality
13
Standard IV (A) - Loyalty
14
Standard IV (B) - Additional Compensation Arrangements
15
Standard IV (C) - Responsibilities of Supervisors
16
Standard V (A) - Diligence and Reasonable Basis
17
Standard V (B) - Communication with Clients and Prospective Clients
18
Standard V (C) - Record Retention
19
Standard VI (A) - Disclosure of Conflicts
20
Standard VI (B) - Priority of Transactions
21
Standard VI (C) - Referral Fees
22
Guidance for Standard VII – Responsibilities of a CFA Institute Member or CFA Candidate

Topics

Investment Management

Course Downloads

Resources

Guidance for Standards I – VII

Study Notes for CFA Level I - Guidance for Standards I – VII

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