9.1 Cash Management Account Description

This topic provides information on Cash Management Account Description.

The following constitute the balance in a CMA:

• The market value of the CMA fund
• The Income Distributions of the CMA fund
• Proportionate investments from other funds which form part of the portfolio at the time of initial investment, for the projected ongoing fees
• Proportionate investments from other funds during top-ups when the balance in the CMA is insufficient to meet the projected ongoing fees for the transaction
• Proportionate switches from other funds when the balance in the CMA is insufficient for a forthcoming annuities or fees.

The projected ongoing fees are calculated on the basis of the loads and load levels specified in the Product Load Maintenance and invested in the CMA. The investment into the CMA becomes available for recovery of fees only during top-up investments and not at the time of initial investment (since the CMA fund becomes operational only after the initial investment).

You need to keep in mind the following for loads for CMA:

• Typically, the distribution fees (like admin and broker fees) are maintained as Level 1 loads and first deducted from the investment. The UT fee, maintained as Level 2, is applied only on the net amount.
• You should map two product level loads which are the exact copy of the load mapped as part of the product-periodic load mapping for ongoing admin and broker fees. Both fees should be defined as Level 1 loads.
• The load mapped above enables the system to project the ongoing fees for the year, deduct the same proportionately from the investment and invest it in the CMA. This ensures that the balance in the CMA fully meets the ongoing fees requirement.
• You can choose whether or not loads should be applicable for transactions in the Cash Management Account fund. If you choose not to maintain any, you need to have criteria based loads to indicate to the system that the CMA should be excluded from ongoing and initial fee calculations (for both admin and broker fee).
• The loads for a CMA transaction will be ROA applicable and be chosen on the basis of the value of the transaction (in case of an initial investment) or on the basis of the market value of an investor (in case of an existing investor doing a top-up)
• The system will not consider VAT for a Unit holder for CMA type of loads.
• The system considers all policies on which the ongoing fees have been calculated as part of allocations on a certain date.