The system can process daily fund expenses across a group of participant entities. Within the expense process, entities are grouped together, creating an expense group, and daily expenses are calculated based on the combined total net assets for all entities that are participants of the group. Each participant entity of an expense group can define the NAV component used to derive total net assets for that fund. The calculated daily expense is allocated proportionately to the participant entities of the group based on the percentage of an entity's total net assets relative to the group of entities' total net assets. The NAV component used to contribute to the total assets of the expense group is also the NAV component used to allocate the expenses down to the participant entities.
Group level expenses aggregate the net assets of multiple participant entities and calculate expenses based on the total group level net assets (or outstanding/settled shares if you select a share based NAV component).
For variable expenses, the system rolls up each entity's NAV component values (that is, prior total net assets) to a group level, applies a variable expense calculation, and allocates the calculated amounts back down to the entities within the group. For fixed expenses, the system also allocates calculated amounts back down to the entities within the group. The allocation for either variable or fixed expenses is based on the proportion of each entity's NAV component amount in relation to the total group level summed value.
For example, if a group fixed expense is $1,000 a day the system allocates it based on the following formula.
Expense Group 1/ Participant Entities | NAV Component | Net Assets | % of Total | $1,000 Fixed Expense |
|---|---|---|---|---|
Fund 1 | Prior Day Net Assets NAV | $1,000,000.00 | 50.0% | 500 |
Fund 2 | Prior Day Net Assets NAV | $500,000.00 | 25.0% | 250 |
Fund 3 | Average Net Assets AVENAV | $500,000.00 | 25.0% | 250 |
A variable expense calculates an expense using the system's variable expense tier structure and applies that to the group level net assets. It then distributes the accrued amount down to each participant entity within a group based on the fund's % of net assets as shown in the fixed expense example.
You can set up a group expense to accrue and allocate that expense on either a daily basis or a monthly basis. You can define a minimum and maximum fee amount for the system to apply at the participant fund level or at the group level during processing. If you define a group fixed expense on a monthly basis, the system can spread the monthly expense amount across the days in the month.
WRITERS NOTE: last paragraph is NEW
0 Comments