Addressing Performance Reporting Errors Under the Asset Manager Code

As an asset manager, you are responsible for ensuring that your firm adheres to the Asset Manager Code. Your firm is preparing its annual performance report, which will be distributed to clients. You encounter the challenge of reconciling a recent calculation error in quarterly performance, which overstates returns in your firm’s previous reports by 0.5%. This error could affect clients’ perceptions of your firm’s management skill and investment strategy.

Your task is to outline the key ethical considerations related to performance reporting as per the Asset Manager Code. Discuss how you would address the situation with clients, considering transparency, integrity, and the potential implications for client trust and your firm’s reputation. Include specific steps you would take to rectify the reporting error and to ensure compliance with the Asset Manager Code.