Many money managers that claim to be in compliance with AIMR performance presentation standards probably aren't, according to the Spaulding Group, Somerset, N.J.
In its latest survey, Spaulding found 73.8% of money managers report to be in compliance with the standards set by the Association for Investment Management and Research, Charlottesville, Va.
But Spaulding noted a substantial number probably aren't in compliance. It cited several reasons, among them:
*Only 69% of the respondents affirmed their composite returns were "asset-weighted." Since asset weighting is a requirement in the AIMR standards, the Spaulding report noted, "we know that at least a few of the firms that claim compliance are falling short in at least this regard."
*A full 24% of the respondents reported using a "catch-all" composite for portfolios that don't easily fit in with other accounts. The AIMR standards don't allow catch-all composites, the Spaulding report noted.
*Firms that verify compliance estimated 39% of the money managers claiming compliance would in fact be found to be in non-compliance in a verification audit.
The survey found 42.5% of money managers have their AIMR compliance verified. In asking why money managers did not undergo verification, the survey found, in overlapping responses, 84.2% of the respondents reported "no one is asking for verification" and 78.9% reported "cost" was an issue.
Spaulding received 148 responses from the 1,196 money management firms it contacted.
