For ________ of five or fewer portfolios, the disclosure "five or fewer portfolios" may be made rather than a disclosure of the exact number of portfolios.
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A. B. C. D.D
This is an exception allowed by AIMR when disclosing the list of composites.
The correct answer is D. composites.
In the context of investment management and reporting, a composite refers to a grouping of individual portfolios that have similar investment strategies, objectives, and risk profiles. It is often used to analyze and present the performance of a specific investment strategy or style.
When it comes to disclosure requirements, the Global Investment Performance Standards (GIPS®) provide guidelines for investment firms to ensure consistent and transparent reporting of investment performance. One of the requirements under GIPS is the disclosure of the number of portfolios included in a composite.
However, there is an exception to this requirement. According to GIPS, if a composite consists of five or fewer portfolios, investment firms have the option to disclose "five or fewer portfolios" instead of providing the exact number of portfolios.
The rationale behind this exception is to balance the need for transparency while recognizing that disclosing the exact number of portfolios in very small composites could potentially compromise confidentiality or proprietary information. By allowing the disclosure of "five or fewer portfolios," the standard aims to provide a reasonable level of transparency without jeopardizing the confidentiality of the investment firm's strategies or holdings.
Therefore, in this question, the correct answer is D. composites, as the "five or fewer portfolios" disclosure applies specifically to composites and not to returns, investments, or segments.