Understand Set Rate Distributions

You can use set rate distributions when you need to calculate and report a set distribution rate for each class of a multi-class fund based off of a “base class” rate. You cannot use fixed distribution rates for this scenario because fixed distributions require that you input all class rates prior to processing. 

When you use set rate distributions, you can add a defined distribution period and set rate to the base class. The system can calculate a class-specific expense differential and apply it to the non-base class rate. When you initially set up the base class’s set rate, you can specify the accounting basis from which the expense differential process retrieves its expense balances. In cases where a class’s set rate is negative, the system allocates that class’s negative income across the other positive classes. On the final day of a distribution period, the system sums the base class daily rates for the period to ensure that they are equal to the total set rate established for the period. If not, the system makes an adjustment to the final day’s rate. Lastly, you can use a manual override set rate panel to review the final daily rate for each class and you can manually override the rate if an adjustment is needed.

Set rate funds do not distribute income on the days following the last distribution payment date at the end of a calendar year but they still accrue expenses. For example, consider the 26th to 31st days of December. You pre-establish these non-distribution periods by creating a new distribution schedule for non-distribution periods. When this situation occurs, the expense differentials are proportionately absorbed over the next user defined calendar days. In most cases it is a single day – 1st of the year. 

You can use a panel to calculate a pre-post expense absorption to help you determine if that absorption should be spread across multiple days to minimize the impact to the fund. The results of this panel show you the individual components used to calculate the expense differential. If you require absorption period adjustments, then you can change the distribution schedule absorption period before you submit the set rate distribution process. The set rate distribution procedure calculates and spreads this absorption amount automatically.

This event that posts set rate distributions is scheduled to run in the default EAGLE CC-Trigger-Txn-Close-Events schedule and runs when transaction periods are closed. You can modify this workflow to meet your business needs.

A Control Center edit test, the Late Expense Differential Activity test, can alert you when you make class level expense adjustments after the system posts the fund’s distribution for the day (or after it posts an expense absorption on the last day of the year). The default EAGLE CC-Trigger-Txn-Close-Events schedule includes this edit. You can then reprocess the distribution or you can cancel/rebook the expense adjustment to the following day to include it in the next day's distribution expense differential. If you rerun the edit test after either of those actions, it automatically clears. Otherwise, if you take no action, you need to manually approve the edit test with explanatory comments. The NAV Reconciliation process and edit test can help manage day over day expense impacts to the fund. The mil rate edits also support funds with the set rate distribution method.

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