1.19 Fund of Funds Processing

This topic provides information on fund of funds processing details.

The EOD batch process Process fund of funds investments is used to generate transactions from the main fund to the underlying funds. Reftype FF identifies the Fund of Fund transactions generated by the system. The transactions are generated for the unit holder maintained in fund linkage details section and the transaction currency will be the fund base currency of the main fund. This is applicable only for Hedge funds module.

For Non-net transactions, during EOD, the system finds the sum of inflow amounts and sum of outflow amounts for all transactions allotted on that day, and generates a subscription and redemption transaction in the underlying funds accordingly.

For net transactions, the system finds the (sum of inflow amount – sum of outflow amount) and generates either subscription or redemption transaction in the underlying funds.

Inflow amount considers subscriptions, switch ins, reversed redemptions and reversed switch outs that are allotted on the application date for the main fund.

Inflow amount = units allotted across all transactions * NAV as of the application date

Outflow amount considers reversed subscriptions, reversed switch ins, redemptions and switch outs that are allotted on the application date for the main fund.

Outflow amount = units allotted across all transactions * NAV as of the application date

If the transaction generation basis is Non Net/Transaction Mode, then during EOD the system find the sum of all amount based subscription and sum of amount based redemption transactions allotted on that day, and generates amount based subscription and redemption transaction in the underlying funds.

Units and percentage based transactions will be generated as amount based subscription and redemption transaction in underlying funds, in maintained ratio. The amount of the allotted transactions will be ‘Units allotted * NAV as of application date’.

Example:

Assume that JPMORG is a Fund of Hedge Fund. JFCHNF and JFHKDF are underlying hedge funds having percentages 50 and 40 respectively. Also, assume that 000000000272 and 000000000277 are the unit holder IDs for JFCHNF and JFHKDF respectively.

Transactions allotted on JPMORG as on 01/09/2009 (Assuming TBC is FBC, NAV is 10 and fund has no load)

Table 1-23 Transaction details

Transaction Number	Transaction Mode	Transaction Value	Transaction Amount
SUB1	Amount	1000	1000
SUB2	Amount	2000	2000
SUB3	Unit	100	1000
SUB4	Unit	200	2000
RED1	Amount	2500	2500
RED2	Unit	50	500

Table 1-24 Transaction Mode and Value

Transaction Mode	Value
Total Subscription Amount	6000
Total Redemption Amount	3000
Total Unit Subscription	300
Total Unit Redemption	50
Total Amount Subscription	3000
Total Amount Redemption	2500
Net Transaction value	3000

Transaction will be generated as given below:

Transaction Generation Basis is NET

Table 1-25 Transaction Generation Basis - NET

Fund ID	Unit holder ID	Txn Type	Txn Mode	Txn Value
JFCHNF	000000000272	SUB	Amount	1500
JFHKDF	000000000277	SUB	Amount	1200

Transaction Generation Basis is NON NET

Table 1-26 Transaction Generation Basis - NON NET

Fund ID	Unit holder ID	Txn Type	Txn Mode	Txn Value
JFCHNF	000000000272	SUB	Amount	3000
JFCHNF	000000000272	RED	Amount	1500
JFHKDF	000000000277	SUB	Amount	2400
JFHKDF	000000000277	RED	Amount	1200

Transaction Generation Basis is NON NET/TXN MODE

Table 1-27 Transaction Generation Basis - NON NET/TXN MODE

Fund ID	Unit holder ID	Txn Type	Txn Mode	Txn Value
JFCHNF	000000000272	SUB	Amount	1500
JFCHNF	000000000272	RED	Amount	1250
JFHKDF	000000000277	SUB	Amount	1200
JFHKDF	000000000277	RED	Amount	1000
JFCHNF	000000000272	SUB	Amount	1500
JFCHNF	000000000272	RED	Amount	250
JFHKDF	000000000277	SUB	Amount	1200
JFHKDF	000000000277	RED	Amount	200