CompositeBuilder

CompositeBuilder is a proven solution to the challenge of building composites, designed to assist your firm in the process of reaching and maintaining compliance with the Global Investment Performance Standards (GIPS).

The application provides a powerful set of tools for the construction and ongoing maintenance of composites.  It provides robust error checking, outlier analysis, comprehensive analytics, very flexible reporting, and a full set of exports to help your third-party verifier quickly make sense of your data.  The application is tightly integrated with PortfolioCenter® and Advent Axys®.

Features

  • With one click, find any eligible portfolios that are not included in a composite.

  • Automatically remove portfolios from composites when significant cash flows occur, when assets drop below the minimum size requirement, or when cash or margin limits are exceeded.

  • On a monthly basis, compare each portfolio in a composite against a target allocation to verify the proper assignment.

  • Use built in filters to find portfolios with outlying returns within a composite.

  • Save days of works with a one-click export of ALL data required by your verification firm.

  • See the entire composite assignment history of a portfolio in one consolidated view along with all periods where the portfolio has been intentionally excluded from composites.

  • Track all portfolios that are not eligible to be included in a composite, including portfolios that are not actually managed or portfolios that are not fully discretionary due to client restrictions.  Portfolios classed as ineligible cannot be accidentally included in a composite.

  • Compute firm AUM on a monthly, quarterly, or annual basis, excluding all non-managed portfolios.

  • Build composites using either individual portfolios or households, depending on how the assets are actually managed.  If a composite includes a household entity, the calculation of the composite’s internal dispersion will use the return of the household, and not the returns of the individual accounts within the household.

  • Throw away your spreadsheets.  CompositeBuilder computes all required metrics for a compliant presentation.

  • Tight controls prevent accidental inclusion of a portfolio group and an individual member of the group in a composite at the same time.

  • CompositeBuilder allows users to track periods of time when otherwise eligible portfolios are not included in a composite.  Such exclusions may include the initial implementation period for a new account, a period when a portfolio becomes temporarily non-managed or non-discretionary due to client intervention, a period in which the strategy of a portfolio is being changed, or a period when a portfolio is being reallocated due to a significant capital flow.

  • Changes in the nature of a portfolio that affect its inclusion within a composite over time may also be tracked. For example, a non-managed account may convert to a fully managed, discretionary, fee-paying account at a specific point in time.  After that point, it will require assignment to a composite, but the prior history of the account, when it was excluded from any composite, will be preserved. 

 

CompositeBuilder provides PortfolioCenter users with an elegant solution to the problem of organizing data in a GIPS compliant fashion. Especially helpful to our firm is the solution to the problem created when portfolios change composites more than once.
— LAURA CARLEY, CFA, CFP - BOYER & CORPORON WEALTH MANAGEMENT, LLC

Complete Audit Trail

The application maintains a log of all historical changes to composite membership as well as changes to all portfolio attributes that affect composite results.  When composites returns are computed, all data points used in the calculations, along with intermediate computational steps, are saved as part of the results, providing completely transparent and auditable composite returns.  The application provides the ability to drill down and view each level of the results.  Each set of composite calculations includes an associated status report that provides a permanent record of any issues encountered during the calculation process.

The retention of all historical details allows Composite Builder to uncover and highlight any changes that inadvertently occur over time within a PortfolioCenter database that might lead to discrepancies from previously computed composite returns.  This includes 1) changes to the collection of portfolios or households included in the composite, 2) changes to household group membership or timing of membership, 3) changes in portfolio attributes such as inception date, close date, discretionary status, fee-paying status, and 4) changes in portfolio values, capital flows, or underlying portfolio returns. A detailed comparison of the underlying data from current and previously computed composite results is provided to assist in determining the materiality of any changes as required by a firm’s policy for restating composite returns.

We found CompositeBuilder to be a well-designed, user-friendly application with a short learning curve.  The built-in audit checks and status reports support accurate record keeping and reporting. The standard suite of data extracts makes interaction with our independent verifier efficient. 

Support staff provided comprehensive guidance during the initial implementation and have been very responsive and accommodating to our needs.
— Vaithehi Muttulingam - Siharum Advisors, LLC

Reporting

CompositeBuilder supports the generation of compliant presentations with all required data points and disclosures.  Returns may be presented in annual, quarterly, monthly, or multi-year periods.  The approximately 40 different report columns include every required and recommended calculation referenced in the GIPS handbook.  All reports are automatically created in a PDF format and saved in the report archive.  All report data may also be exported in a CSV format.  All disclosures required by GIPS may be created within the application and assigned to the appropriate composites.  

One of the many great features of CompositeBuilder is the ability to monitor if all accounts are assigned to a composite.  This is invaluable in a firm like ours where we manage in excess of 15 individual strategies as well as maintain other additional composites.  With our previous software it was a huge amount of work when a client switched composites. Now the change is simple.
— Arno O. Mayer CFA CFP - Financial Trust Asset Management

Third party verification

All of the data required for verification may be assembled and exported in one click.  In just a few minutes, all required data is exported to CSV files and is ready to upload to your verifier.  The data formats of the verification exports are designed specifically to meet the requirements of the major verification firms.

The thoroughness and attention to detail built into CompositeBuilder are quite
amazing!
— JOHN V PURRINGTON ARMOR - INVESTMENT ADVISORS, LLC

Rule based composite construction and validation

CompositeBuilder provides comprehensive rule-based, automated composite construction and validation.   A rule, for example, could specify that a composite include all portfolios with over one million dollars in assets and at least 90% of its assets in the equity asset class.  Asset allocation criteria may be based on security type, asset class, sector, subsector, or a combination of categories.  Other attributes that may be included in a rule, either singly or in combination, are Minimum size, Objective, Model, Target, and Set Membership (smart or static sets). The ability to use smart set membership as a criterion in a rule effectively allows the use of all of the custom fields defined in PortfolioCenter as criteria for composites since all custom field values may be used to create smart sets.  Rules may also reflect changes in the criteria for inclusion in a composite that may occur over time.  Rules may be used to create composite assignments over time, or they may be used to validate existing assignments on a month-by-month basis.

CompositeBuilder will generate validation warnings when cash flows within a month exceed the “significant cash flow” limit specified per composite, or when the percentage of cash within a portfolio or the amount of margin used by a portfolio exceed the designated limits, if any, for inclusion in a composite. 

For rule generated composite assignments, you may select a preferred convention for the beginning and ending dates of assignments. Assignments may begin with the first full month after qualification or with the first full calendar quarter after qualification. Assignments may terminate at the end of the last full month in which the portfolio qualifies or at the end of the month during which the portfolio no longer qualifies. Assignments may also terminate at the end of the last full quarter in which the portfolio qualifies, or at the end of the quarter during which the portfolio no longer qualifies.  A month-by-month data dump of all attributes considered during the execution of a rule is automatically created for audit purposes. 

Calculations

Composites are computed using the monthly performance intervals from PortfolioCenter.   All of the composite dispersion measures identified in the GIPS standards are available within the application.  A custom-blended benchmark may be assigned to each composite.  Blended benchmarks are automatically reweighted on a monthly basis.  Composite returns net of fees may be computed using a model fee schedule when monthly net returns are not available from PortfolioCenter.

Firm Assets

Firm assets exclude any portfolios that do not represent actual managed accounts, such as model portfolios, “advisory only” portfolios, and any portfolios included in PortfolioCenter solely as an accommodation to a client. Total firm assets may either exclude or include individual positions that have been excluded from performance in PortfolioCenter, depending on the firm’s preference.

Carve-outs

CompositeBuilder supports the ability to include asset class carve-outs in composites.  For carve-outs prior to January 1, 2010, cash may be allocated from the total portfolio to synthetically derive a return that includes a cash component.  Cash may be allocated to the carve-out segment based on the beginning of period relative value of the asset class or on the basis on a strategic target identified at the beginning of each month.  Model fees may be selectively applied to carve-out portfolios. 

Identification of outliers and more … 

CompositeBuilder provides two methods for identifying outlying portfolio returns within a composite.  It identifies portfolio returns that exceed either a user-defined threshold around the composite return or a threshold around the un-weighted mean portfolio return within the composite.  CompositeBuilder also calculates the contribution weight of each member portfolio to the composite return. 

A report of all individual assets included in a composite can be generated for any month-end period. 

Historical composite returns and their associated analytics from another system may be imported on a monthly or annual basis and combined with ongoing returns computed by CompositeBuilder.