Understanding the Portfolio Forecast Engine

Portfolio Forecasting enables you to enter forecast assumptions and aggregate new volumes for use by the PeopleSoft Financial Services Industry applications easily, rapidly, and interactively.

Portfolio Forecasting uses the Portfolio Forecast application engines (FI_FCSTFTP/FI_FCSTRWC) for one streamlined set of functionality that is tailored specifically to Financial Services Industry needs. This enables you to model future changes in product portfolio composition based on unique business rules, projections, and assumptions.

Using the Portfolio Forecast application engine, you can forecast multiple periods, product balances, target balances, and FTP rates. The Portfolio Forecast application engines perform these functions:

• Updates balances of existing pools for future fiscal year and accounting periods based on existing cash flow output data.

• Uses forecasted product origination data to create new product pools with starting balances and the proper financial attributes.

• Calls the Cash Flow Generator process to create cash flows for the newly created product pools.

Run the Portfolio Forecast application engine to include forecasted product originations in the financial performance measurements of the future, including:

• Strategic corporate planning.

• Business unit, department, or product level planning.

• Analytic simulation runs for different scenario IDs.

The Portfolio Forecast application engine produces the following output:

• New future-dated instrument pools that represent new product originations (FI_POOLINST_F00 data).

  The application engine, FI_FCSTRWC creates new FI_POOLBAL_R00 data.

• New cash flow record output for future-dated instrument pools (FI_POOL_CF_R00).

  The engine saves these results to file, but retains only the ACC rows to limit output to one row per month per pool for most customers.

• Financial Calculator rows for future-dated instrument pools (FI_POOLCALC_R00)—one row per pool.

• FI_FCSTFTP Forecasts FTP Rate output rows—one row per pool.

The main objective of using the Product Forecast application engine is to enable you to enter forecasted volumes and to prepare and aggregate these volumes for the Portfolio Forecast application engine. When you run the Portfolio Forecast application engine, it automatically identifies and processes the entire forecast horizon as defined in the analytic forecasting rules, generating new origination pools and building balance records for each period that reflects runoff.

Typically, you run the Portfolio Forecast application engine in a job stream. This job stream must always be run with a scenario ID with a type of FORECAST, and the dates on the run control page must occur within the forecasted scenario's time span.

The main purpose of the Portfolio Forecast application engine is to provide future balances to forecasting jobs. This means that the Portfolio Forecast application engine must translate the new business assumptions from Product Forecast application engine into starting product balances (starting balance of a product that starts at a particular time in the future). The Portfolio Forecast application engine also must obtain amortized balances from historic products (products that have already started in the past) and historic new business assumptions (the amortized balances of the new business assumptions from previous fiscal year and accounting periods). Here is an example:

Analysis date: 01/01/2001

Existing portfolio data:

• Start date: 11/01/2000

• Historic balance amounts: 11/01/2000, 1,000,000 USD, 12/01/2000, 990,000 USD, 01/01/2001, 980,000 USD

New business assumptions:

• January 2001: 2,000,000 USD (this amount will be amortized like the historic balance—that is, 02/01/2001, 1,990,000 USD, 03/01/2001, 1,980,000 USD, and so on).

• February 2001: 5,000,000 USD (this amount will be amortized like the historic balance—that is, 03/01/2001, 4,990,000 USD, 04/01/2001, 4,980,000 USD, and so on).