Training Courses

Understanding Fund Administration

Category: Fund Administration

Course level: Introductory

In house

This one-day course is designed to broaden the knowledge of staff in the investment administration function and enable them to be more effective and productive in their roles.

The course may be used as a follow-up to our Introduction to Investment Management course, but no prior knowledge is assumed and all terms will be fully explained.

Examples of real-life client reports, fund valuations and fund fact sheets will be used in case studies.

Objectives

By the end of the course, delegates will have a more complete understanding of:

  • settlement processes
  • global custody and stock lending
  • fund administration processes
  • fund accounting
  • pricing and dealing in retail funds
  • client reporting
  • processing corporate actions
  • the impact of FSA SYSC regulations

Length

1 day

Course Content

Investment institutions

Role of the front, middle and back office
How do investment managers make decisions?
Day in the life of an investment manager
Asset allocation switches, stock selection (buy/sell orders), active investment strategies
Role of the dealers
Role of the administration team, custody, corporate actions, etc.

Senior management responsibilities

FSA principles for business
Statement of principles for Approved Persons
Code of Practice for Approved Persons
Systems and Controls (SYSC)
Case study: Managing risk in a firm – the group will be split into syndicates and each team will be asked to evaluate three sources of risk to the firm, their effects and possible solutions

Asset classes

Shares, bonds, cash and MMIs, derivatives
Alternative investments

Anatomy of a trade

Following a trade round an investment firm
Case study: Pre-trade administration – what information must an investment manager gather from the fund administration team before a trade is entered onto the system and what information is included on the deal ticket?
Case study: Completing a deal ticket – what information must be included and why is it crucial?

Settlement

Deal input onto the system – automatic vs manual
Journals, ledgers, posting to client accounts
Which price is posted (i.e., warehousing)
Reconciling stock and cash positions with trade confirmations


Cash management

Sources of income
How cash is paid out
Overnight deposits and funding
Securing cash using repos

Fund accounting

Accounting concepts
Double entry, accruals, transaction vs settlement date accounting
Entering trades into fund accounts
Capital account
Write-downs and write-ups
Revenue account (P&L)
When is income accrued?
Bonds vs equity conventions
Allowable vs non-allowable expenses
Accounting for income
Taxation
Fund Accounts
Case study: Looking at a fund annual report

Global custody

Global custody, sub-custodians and depots – what do they do?
Reconciliations with the manager and administrator
Custodian links with the fund manager via the administrator
Nominee accounts – pooled vs designated nominee
FSA Client Assets Sourcebook (CASS)
Client money rules
Reconciliations
Separation of client assets
Lending client assets
Why funds use shorting (e.g., hedge funds)
Custodian vs investment manager responsibilities
Showing short position on valuations
Securing short positions with collateral
Worked example: The stock lending process

Fund pricing

Valuation point
Calculating NAV
Single pricing
Dilution levy vs swinging mid price
Dual pricing
Cancellation and creation prices
FSA pricing rules
CISs dealing
IFAs, fund supermarkets, discount brokers, processes, subscription and redemption payments
Worked example 1: Calculating the price of an open-ended fund
Worked example 2: Calculating equalisation

Performance measurement

Retail benchmarks
Indices and sector average (S&P, Lipper)
Risk analysis
Alpha, beta, Sharpe ratio, information ratio

Client reports

What information is required? (Manager’s report, valuation, income statement, etc.)
What does the client expect to see in a typical report?
Statutory reports
What is required, format and content
Case study: Review of a retail fund annual report

Corporate actions

Dealing with income – dividends, coupons, fees
New issues – rights issues, scrips and share buybacks, etc.
Voting at company meeting, electing proxies
Example: Dealing with a rights issue
Case study: Fund administration processes – syndicate groups will put the individual stages of a transaction into the correct order

This course would be suitable for:

  • Client services and call centres
  • Finance and accounting
  • HR and training
  • Investment administration and operations
  • IT and software developers
  • Legal & Compliance
  • New entrants
  • Risk management

This course would be suitable for these exams:

  • IMC
  • SII Diploma - Global Operations Management
  • SII IAQ - Asset Servicing
  • SII IAQ - Global Securities Operations
  • SII IAQ - IT in Investment Operations
  • UKSIP - Investment Operations
Contact Us