2.1.6.9 Policy Fund Ageing

This topic provides information on ageing policy for fund details.

A subscription transaction entered into by an investor into any fund can be tracked till the units resulting from the transaction have been cleared in full from the unit holder account of the investor. This is known as ageing.

Each fund may have a different approach to ageing a transaction. The approaches followed in Oracle FLEXCUBE Investor Servicing are presented below:

FIFO (First In First Out)

In this approach, in a scrip-less fund, the unit balance resulting from the earliest transactions of the unit holder in the fund would be considered for redemption.

Ageing based on Transaction Receipts

In this approach, in a scrip-less fund, the unit balance resulting from any earlier transaction chosen by the unit holder, based on the receipt presented for the same, would be considered for redemption.

Hierarchy

If the AMC services distributors according to a service level agreement, and the distributor books are maintained at the AMC, the option of ageing transactions received from the distributors according to the hierarchy agreed to, is available. The allocation process updates the balances at a unit holder and fund level. The distributor books are a reflection of the underlying hierarchy holdings based on the AMC-Distributor agreement.

IOF/IRRF Optimization

If a fund has IRRF/IOF taxes applicable, provided the fund holding is redeemed within a stipulated time then the IRRF/IOF based funds and the subscription transactions to be redeemed are selected in the following order of priority.

• Not in the Lock in period for gains
• Lower IOF percentage
• Lower IRRF percentage
• Greater number of days to change the IRRF slab.

Funds following the IRRF/IOF taxation method need to be classified as “Pension Funds” and “Non Pension Funds”.

FIFO across products

In money market funds in which there is a daily declaration of dividend, the ordering of transactions for ageing, in the event of redemption, is based on the FIFO principle. In addition, the dividend due to the unit holder as a result of the transactions that has been distributed in the present payment cycle is also considered.

After the dividend computation is made and the appropriate tax deducted, the transactions are ordered for ageing based on non-taxable and taxable holdings of the unit holder across products, in the following sequence:

1. Units for which the retention period has expired and which have already gone through a minimum of one dividend cycle and are taxable
2. Units for which the retention period has expired and which have not gone through a single dividend cycle and are taxable
3. Units for which the retention period has expired and which have already gone through a minimum of one dividend cycle and are not taxable
4. Units for which the retention period has expired and which have not gone through a single dividend cycle and are taxable
5. Units for which the retention period has not expired and which have not gone through a single dividend cycle and are taxable
6. Units for which the retention period has not expired and which have not gone through a single dividend cycle and are not taxable

Note:

This feature (FIFO across products) is available only if your installation has specifically re\u0002quested for it.