Asset Manager Code (AMC) Guidance

The Code and Standards are meant for individuals who may manage assets and may also have other roles in the investment profession; the Asset Manager Code (AMC) is meant for _firms_ that manage assets. The guidance for compliance with the AMC is structured around the six categories of activities for asset management firms, including loyalty to clients, the investment process, trading, risk management, performance and valuation, and disclosure.

Much of the guidance is just what you'd expect, knowing the Code and Standards, just redirected to apply to a firm. For example, a firm has greater responsibilities when it comes to ensuring that processes and resources are in place to comply, whereas an individual doesn't necessarily have that responsibility. Say there's a situation where an individual suspects that objectivity may be compromised. The Code and Standards advises the individual disclose or notify a supervisor or employer or client. What do you think the AMC advises?

Not quite.

Yes!

No.

Advice to remember the duty to the employer or professional behavior really applies to individuals, so that kind of guidance would come from the Code and Standards. Providing policies that limit personal trading by employees, as well as compensation systems that discourage such situations, are functions of the firm, so that's the kind of guidance that would be found in the Asset Manager Code.

Of course, the guidance to the firm is always in keeping with the characteristics of behavior, such as acting with independence and objectivity, acting in the best interests of clients, acting with competence and diligence, and so forth. For example, which do you think the AMC advises firms around risk-management activities?

Yes.

No, a firm doesn't have to go that far.

To sum up: [[summary]]

One activity that's typically much greater for asset management firms is risk management. An individual CFA® charterholder may have risk-management responsibilities for her positions if she's a trader, for example, but many roles filled by charterholders—such as that of analyst or adviser—have little risk-management responsibility.

Since the firm should be acting with competence and diligence, it's not necessary to outsource the back office to ensure objectivity. The AMC suggests third-party confirmation as a way of monitoring that very competence and diligence is sustained.

Remember the duty to the employer

Develop policies that limit personal trading by employees

Remember that individuals should behave in a professional manner

Arrange for third-party confirmation of the accuracy of portfolio information

Outsource back office management to ensure objectivity in performance reporting

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