Unit Pricing
InvestPro calculates the frequential Unit Prices for the individual units of a fund.
Valuations information is taken from the markets and InvestPro uses this feed to determine the valuations of the level one funds. The Unit Pricing process then operates on a cascade-up approach from the level 1 funds up to the highest level funds.
The system is fully multi-currency compliant. Funds can be denominated in a range of different currencies. Furthermore underlying investments can also be denominated in any currency and an individual unitised fund can invest in a range of underlying unitised funds denominated in different currencies. Furthermore, Unit Pricing for publication can be carried out in multiple currencies so that there is more than one Unit Price issued for a fund or funds. In 2002 InvestPro successfully managed the conversion to the Euro for our clients, firstly for conversion for inter-institutional transactions and then for conversion for retail transactions.
Within the Unit Pricing process, InvestPro has incorporated important features. For example:
- Multi series functionality
- Costs of acquisition and costs of disposal are catered for
- Rounding charges and rules are programmed when the funds are set up
- Bid and Offer Spreads functionality
- InvestPro supports Unit Pricing Groups
Accounting for asset disposals on a specified basis is a standard function. InvestPro supports both the first-in, first out (FIFO) and average cost method.
Special Valuations
InvestPro calculates the special valuation Unit Prices used for financial reporting for the individual units of a fund.
Management Charges
Management charges are fully allowed for in the Unit Pricing process. Funds can have a multiple number of fund charges comprising of Management Charges, Investment Management Charges, Administration Charges and numerous others.
Tax Charges
InvestPro caters for the full range of required tax calculations. The system includes separate sub-procedures for the calculation of Tax on Income, Realised Gains and provision for Tax on Unrealised Gains. It also supports the placing of a Value on Tax Losses.
Data Sources
Unit Pricing requires a range of data feeds from the market. Within InvestPro there is an automatic import of foreign exchange (FX) rates, market prices of investment securities, prices of external unitised vehicles and finally there is automatic import of external fund values for non-unitised funds that are administered externally.
Link to Processing Systems
InvestPro automatically up-loads Unit Prices to the policyholder processing system(s) and to defined external media e.g. newspapers, fund supermarkets etc.
Controls for Unit Pricing
At FRS we have developed the most complete suite of controls aimed at protecting against errors in the production of Unit Prices. InvestPro produces a combined control report covering all funds that have been priced. This report is aimed at the senior fund administrator who is responsible for signing-off on the calculated Unit Prices. The senior supervisor can quickly ensure that the process has completed and that InvestPro's proprietary checks have been passed.
For each fund that has been priced, InvestPro will carry out a reconciliation of Unit Prices to previous Unit Prices. This analysis shows the % change since the last price by component including:
- Change in value of unit-holdings in underlying funds
- Income
- Realised gains
- Unrealised gains
- Expenses
- Costs of Acquisition
- Gain on unit appropriations
- Change in taxation accruing
- Change in management charges accruing
InvestPro also carries out audit controls on data inputs to the system so to avoid 'rubbish in - rubbish out' type faults.
- % Change in market prices of investment securities
- % Change in FX Rates
- % Change in external NAVs
InvestPro employs advanced benchmarking functionality. This allows the user to specify a set of assets that would be defined as a good proxy to the fund in question. The control report shows the difference between the actual % change in Unit Prices and the expected % change in Unit Prices based on the benchmark. The user is alerted to differences (above defined tolerances) in movements between the benchmark assets and the fund.
Once the Unit Pricing review is complete, Unit Prices must be committed to InvestPro's database before publication is allowed. This process of committing results is a separate process to generating the Unit Prices; put differently, the Unit Pricing output is held in uncommitted form until Unit Prices are formally signed off. This functionality utilises user security so that the management can be confident that the production and sign-off are two distinct processes.
An Operational Log is maintained in the database specifying both the generation time and the time of Unit Pricing updating. The data log records all activity on the system by all users.
InvestPro allows more funds to be administered by fewer people in less time and with rigorous controls.