Manage Transactions for Hedge Share Classes

After you set up the share classes that elect to process share class hedging and set up sector exclusions, you can book and settle foreign capital stock for hedge share classes.

WRITERS NOTE: FYI, we don’t currently document the Cap Stock transaction panels (including Book Non Base Capital Stock) or Settle Capstock panel anywhere in the Documentation wiki. Would it be useful to document them in the future? If so, do you have any info? It looks like they have been around forever.

Book Foreign Capital Stock for Hedge Share Classes

In the Book Non Base Capital Stock panel, you can book foreign capital stock for hedge share classes.

To book a transaction for foreign capital stock for hedge share classes:

1. In Accounting Center, in the left navigation pane, click Fund Accounting > Cap Stock > Transactions > Book Non Base Capital Stock.
   You see the Book Non Base Capital Stock panel.

2. In the Entity ID or Entity Name fields, enter the fund for the transaction.
   In this example, you select fund FX45. You see the base currency for the entity in the Account Currency field. It is USD in this example.

3. In the Share Class field, select the share class.
   In this example, you select a hedge share class, B.

4. In the Asset Currency field, select the non base currency.
   In this example, you select BZD.

5. In the Local to Base FX Rate field, specify the foreign exchange rate used to calculate the net base amount.

6. Complete the remaining options in the Book Non Base Capital Stock panel.

7. Click Submit.

The following figure shows an example of the Book Non Base Capital Stock panel. In the example, you book a transaction for fund FX45’s share class B. When you select the entity, the Account Currency displays as USD. You set the Asset Currency field to BZD and complete the remaining fields in the panel.

Settle Foreign Capital Stock for Hedge Share Classes

In the Settle Capstock panel, you can settle the transaction for foreign capital stock for hedge share classes. When a share class settles a non base capital stock subscription or redemption and the share class hedging election is Yes, then the gain/losses from that settlement are fully allocated to the hedge share class.

To settle a transaction for foreign capital stock for hedge share classes:

1. In Accounting Center, in the left navigation pane, click Transactions > Cash > Settlements > Settle Capstock.
   You see the Settle Capstock panel.

2. In the Entity ID or Entity Name fields, enter the fund for the transaction.
   In the Port Comp Type field, you see the master fund type. For example, Mutual Fund.

3. In Cap Stock Event Type, select SUBSCRIPTION or REDEMPTION.

4. In the Share Class field, select the share class.
   The Share Class Hedging field display a value of Y if the share class elected share class hedging.

5. Complete the remaining options in the Book Non Base Capital Stock panel.

6. Click Submit.

The system passes the Share Class Hedging field value in on the settlement event. This allows the ledger posting to know to post all gains/losses associated with the settlement directly to the share class. Ledger posting posts any calculated gains or losses associated with hedge share classes directly to that share class rather post to the total fund to be allocated to all share classes within the entity.

In the following example, notice that you are settling a transaction for entity FX023 and share class G, where the Share Class Hedging field has a value of Y.

The following figure for this example shows the Accounting Journal report, where you can see the trade date to settlement date gain was fully allocated to share class G, rather than being allocated across all classes within the entity.