CFA Ethics Practice Test 2026 – The All-in-One Guide to Mastering Your Ethics Exam!

Under GIPS, when a firm has the power to choose a sub-advisor for a strategy, those assets are managed under the firm’s investment discretion and must be included in the firm’s performance reporting. This ensures the reported performance reflects all assets the firm actually directs, not just the assets managed in-house. Excluding sub-advised assets would misrepresent the firm’s overall scope and could bias performance results. Merely stating the use of a sub-advisor isn’t enough—those assets must be included in the appropriate composites and disclosures so the presentation is complete and comparable. Therefore, including assets assigned to a sub-advisor provided the firm has discretion over selecting the sub-advisor is the correct approach.