A composite is a group of portfolios managed according to the same style or strategy. For investment managers to claim compliance with the standards, all discretionary portfolios managed by the firm must be included in at least one composite. Composites are defined based on several factors, including strategy, style and benchmark. An example of a composite is the U.S. Large Cap Growth/Private Client Composite. It includes all fully discretionary, taxable portfolios managed according to the fund's growth stock investment strategy, benchmarked against the Russell Growth stock index, with a minimum asset size of $1 Million.
There are two types of composite entities, as described in the following table.
Entity Type | Description | Single-Period Constituent Inclusion Rule | Composite Return Calculation Types Supported |
|---|---|---|---|
ACOM | Performance Composite. Complies with GIPS for Composite Definition, Calculation and Presentation. | Portfolios that were in the composite the entire calculation period are included as constituents in the composite. | Weighted Average |
COMP | Composite. Core PACE composite, does not comply with GIPS for Composite Definition, Calculation and Presentation. Used for performance attribution on a composite. | Composite constituents that were in the composite at the beginning of the calculation period are included as constituents in the composite. | Weighted Average |
Notice that you can calculate composite returns using two different methodologies. The weighted average return method is the method used by most investment firms for calculating single-period composite returns used for GIPS composite presentations. But both this and the aggregate of holdings and flows method can be used in Eagle Performance. Here you are focusing on the GIPS composite setup and you use the entity type ACOM to store information on these composites.
When you manually add or edit a constituent of the GIPS composite, you can identify the portfolio you are adding, the date as of when you are adding it to the composite, and the reason you are adding it.
You can also associate a business calendar with the composite in order to apply that composite's business calendar when performing the business calendar check. For more information about setting up entity level business calendars, see Performance Analysis and Reporting.
You can assign benchmarks to a GIPS composite. For more information about setting up benchmarks and custom benchmarks, see Benchmark Management. For detailed information about the Process Across Changes option and how the system uses it in GIPS reporting, see GIPS Composite Management Configuration.
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