Investment Fund Operations & Administration

Investment Fund Operations & Administration is a highly practical three-day course designed to give you a thorough working knowledge of how unit trusts, mutual funds, pensions funds and hedge funds are constructed, invested, managed and administered.

Combining presentations, group discussions and practical exercises, the course covers in detail a broad range of topics including:

• All types of assets - including alternative, illiquid and volatile assets
• Comparative fund types, structures, and legal aspects
• Understanding benchmarks, mandates, investment objectives and constraints Pricing and valuation
• Reporting & compliance - valuation, reconciliation and settlement
• Registrar and transfer agency services
• International client services
• Client reporting: customised reporting, multi-currency/instrument reporting, and tax reporting
• Compliance, tax and anti-money laundering issues

• Equip yourself with a clear understanding of how and why funds are established, the nature and impact of investment decisions, pricing and valuation, related activities such as portfolio balancing and performance measurement and how these processes affect operational, compliance, reporting, and other administration procedures

• Examine a wide range of fund types, their characteristics, operation and administration features, including: mutual funds and unit trusts, pension fund, hedge funds and FOFs, real estate funds, venture capital funds, money market funds

• Enhance your market knowledge not only of traditional investment products such as bonds, equities and money market products, but also of more complex products such as derivatives, CDOs, structured products, exchange traded funds, real estate, private equity, commodities and any related structures such as SPVs, SIVs etc.

• Increase your confidence in controlling fund administration procedure, accurate pricing, valuation and best execution skills

• Refine your skills in the correct legal and compliance procedures, and confidence in liaising with fund managers, investors, sponsors, fund services providers, custodians, and regulators

• Operations supervisor or manager
• Compliance manager
• Risk manager
• Fund administrator
• Fund services relationship manager
• Hedge fund administrator
• Software provider or consultant
• Custodian Finance and administration
• Audit and supervision Regulators

Day 1

Session 1

Investing Fundamentals and Asset Classes
• The current investment environment
• Introduction to investing asset characteristics and asset allocation
• Asset Classes
- Securities, Derivatives, Alternatives etc.
• Current investment environment – trends, economic environment, etc
- ETFs
- Multi-Asset Class
• Exercise: Participants look at a typical Fund fact sheets and discuss and in groups discuss the assets required to build the fund and the likely challenges to Fund Operations and Administration.

Investment Fund Types
• Retail and non-retail funds
• Off-shore vs domestic funds
• SICAV in France and Luxembourg
• Mutual Funds and Unit Trusts (OEICs in the UK)
• Collective Investment Schemes
• UCITS and AIFMD
• ETFs (Exchange Traded Funds)
• Hedge Funds
• Private Equity Funds
• The New APAC Funds Are Coming!
- ASEAN - Collective Investment Schemes (Singapore, Malaysia, China)
- MRF - Mutual Region of Funds (HK and China)
ARFP – Asia Region Funds Passport (Australia, Japan, South Korea, New Zealand, Thailand)
• Exercise: Participants are asked to list the type of funds that they are currently supporting and give feedback on what new types of fund they are expecting to see in the near future.


Session 2

The Asset Management Life Cycle - Asset Manager to Administration
• ACD Asset Manager
• Role of the front, middle and back office
• How do investment managers make decisions?
• Asset allocation switches, stock selection (buy/sell orders), active investment strategies
• Role of the dealers
• Role of the administration team, corporate actions, valuation, accounting, custody etc.

The Fund Administration Map
• Board
• Investment Manager
• Transfer Agent
• Fund Administrator
• Custodians
• Depository

• Exercise: Complete the Fund Administration Map. In groups delegates complete a flow diagram of which organisations handle which role, and how they interact.

The Fund Administration Process
• Roles and responsibilities
- Defining the responsibilities of each player involved in the overall administration of the fund
- Trade Processing
- Subscriptions / Redemptions
- Underlying Fund Investments
- Trade Errors
• Valuation
- MTM (Mark to Market)
- NAV
- reconciliation
- settlement

• Managing your relationship and communication with:
- investment managers
- brokers / prime brokers / advisors
- custodians / depository
- fund sponsors
- trustees
- investors

Exercise: Teams draw flow diagrams highlighting how settlement will occur in securities and derivatives trading. What can go wrong?

Day 2

Session 3

Operation of a Fund
Valuation / accounting team (NAV)
- Transaction capture
- Validation
- Reconciliations - Position management
- Cash flows and Cash Management
- Corporate actions
- STP and SSIs
- Margin calls
- Collateral management
- Valuation policies, transparency and disclosure
- Relevant Regulatory, Industry and Accounting Standard
- Price Information and Automation

Exercise: Delegates calculate the NAV of a fund

- What actions are required in dealing with:
o AGM decisions
o mergers/takeovers
o corporate actions

- Book-keeping for all portfolio transactions
o when should a position be included in the valuation? i.e. trade date, settlement date, date of receipt of broker confirmation, etc.
o is it necessary to receive a broker confirmation prior to recording a transaction handling of fund-to-fund transactions or cross trades

Fund Valuation

Registrar and transfer agency services
- Maintaining the shareholders' register for the fund
• issuing certificates
• amendments to investor details / powers of attorney
• Dealing with investors
• Offering documents
• Subscription and redemption process
• KYC and AML checks
• Notifications
• Potential problems

Global transfer agency function
- Registrar Function Overview

• Stock Registrar / Bond Registrar
• Agent Function

• Dividend Payments / Cash Dividends / Stock Dividends / Reinvested Dividends Interest Payments Bond Principal / Payments
• Payment Processing Check
• Record Keeping / DRIP / Proxy Services / Preferred Stock Calls

Session 4
Role of the Middle Office
• Control and checks on Funds
• Control and checks on Fund Managers
• Collateral Management
• OTC counterparty exposure monitoring
• Margin calls
• Pricing valuation Validation
• Model inputs
• Yield Curves and Volatilities
o assumptions such as default rates
o Monte Carlo simulations generated
o The Greeks
o VaR

Risk and Compliance
• Operational Risk Management
- People / Processes and Controls
- Risk Review and - Policy Setting
- Investment Restrictions
• Bookkeeping
- Accounting Principles
- General Ledger
- Tax – including withholding tax (WHT)
- Financial statements and management reporting

Role of Compliance – in the fund

Exercise: In groups, participants assess and list the different types of risk a fund may face and consider which internal controls and regulations should exist to ensure the fund is compliant.


Modern Fund Administration - Performance Measurement
- Benchmarks
- Alpha and Beta
- Absolute Return
- Sharpe Ratio
- Information ratio Performance Attribution
- Global Investment Reporting Standards (GIPS)


Today’s Regulatory Impact – What really matters to the World’s Top Fund Administrators
• Swing Pricing
• MiFID 2
• Solvency 2
o Impact of Asset “Look Through” on Funds
o Risk Based Capital Requirement (SCRD)


Final Q & A Session