1.20 Master Feeder Funds Processing

This topic provides information on master feeder funds processing details.

The transactions that happen in a feeder fund are fed to the master fund based on the value of Transaction Generation Basis (N-Net, O- Non Net) maintained at fund level for the percentage specified in Fund linkage details section in Hedge Fund Processing Rules screen.

The transactions from the feeder funds to the master fund are generated using the Process master feeder investments batch process. Reftype MF identifies the master feeder transactions generated in this batch.

If Transaction Generation Basis is N-Net basis then system posts the transactions as follows:

• Net amount = (Total inflow amount – Total outflow amount)
• If Net Amount is positive, the batch procedure posts a subscription into the master fund
• If Net Amount is negative, the batch procedure posts redemption transaction into the master fund

If Transaction Generation Basis is O-Non Net basis then system posts the following two transactions during EOD batch:

• Subscription transaction for the total inflow amount
• Redemption transaction for the total outflow amount

Total inflow amount considers subscriptions, switch ins, revered redemptions and reversed switch outs that are allotted on the application date for all the feeder funds.

Inflow amount = units allotted across all transactions * NAV as of the application date converted to master fund FBC using the default exchange rate, if the currency is different.

Total outflow amount considers reversed subscriptions, reversed switch ins, redemptions and switch outs that are allotted on the application date for all the feeder funds.

Outflow amount = units allotted across all transactions * NAV as of the application date converted to master fund FBC using the default exchange rate if the currency is different.

A percentage of the inflow and outflow amounts, as maintained in the fund linkage details, is fed to the master fund.

Example

Assume that JPMorgan Fund (JPMORG) is a master fund. JF Greater China Fund (JFCHNF) is a feeder fund, which invests 89% of its net assets in a unit of JPMorgan Fund (Master fund). JF Hong Kong Fund (JFHKGF) is another feeder fund, which invests 90% of its net assets in a unit of JPMorgan Fund (Master fund).

In the fund rules setup of JPMORG you can capture the split percentage details as follows, in Fund linkage details section.

Table 1-28 Feeder fund details

Feeder fund ID	Fund Name	Percentage
JFCHNF	JF China Fund	89
JFHKGF	JF Hong Kong Fund	90

If an investment happens in JFCHN fund for 100 units, then an amount 890 (89% of the inflow amount) gets invested in JPMORG fund.

If an investment happen in JFHKGF fund for 100 units, then an amount 900 (90% of the inflow amount) gets invested in JPMORG fund.

Note:

The above example assumes that both the master and feeder fund FBCs are same and without any loads at the master and feeder level. It also assumes an NAV of 10 for the funds.

If the feeder and master fund FBCs are different, then the feeder fund investment is converted into master fund FBC.