The following is only applicable to clients who have upgraded to the new spending interface. We are processing a wait list for current clients that would like to convert to the new spending interface. Contact email@example.com if you have any questions!
The example below is for our client that need to average fund/pool values based on calendar year-end but then posts distributions based on units owned at fiscal year-end.
Fundriver University’s spending rule averages unit price for the preceding 12 quarters based on calendar year-end. The dollar amount per unit is then applied to the most recently closed period monthly. To determine the Dollar Amount Per Unit to be applied to the funds, Fundriver has set up two spending rules. Below are the steps to take on an annual basis.
Setting Up and Verifying Distribution Rules
1. Set up a Percent Average spending rule.
To do so, go to Organize > Spending Rules and click the green add button. Select the Type as Percent Average. On an annual basis a user will change the allocation date in the percent average spending set up to the most recently closed calendar year-end. Fill in the remaining spending parameters for posting frequency, underwater parameters and your spending calculation. Click ‘Save’ at the bottom of the screen.
2. Next the user will need to assign funds that should receive spending to this spending rule.
To do so click the Assign Primary Rules tab across the top. Choose the percent average rule setup in step 1. Move funds that should receive distributions over to the right column, Funds Assigned to Select Rule by using the right arrow (->) in the center of the page.
3. You can now determine what the average dollar amount per unit will be.
To view the average dollar amount, run the Estimated Spending Report (with Column Grouping and Drill Down). The report should be run based on prior calendar year-end.
The report will open in a new web browser window. Click through the report until a fund with spending is on the page. Choose any fund’s annual estimated spend amount that is a blue clickable link:
A secondary drill down report will open. This report shows how Fundriver calculates the average dollar amount per unit based on the previous 12 quarters. Take note of the DPU at the bottom of the page.
4. Next the user will set up a Dollar Amount Per Unit spending rule.
To do so, go to Organize > Spending Rules and click the green add button. Select the Type as Dollar Amount Per Unit. The allocation date should be the date you want distributions applied to units as of. In our example we are taking the average value based on calendar year-end but applying spending based on the value of the fund at fiscal year-end. Fill in the remaining spending parameters for posting frequency, underwater parameters and enter the DPU from the drill down report in step 3 above, click save.
5. Next you will want to assign your funds to the DPU rule. To do so go to Assign Primary Rules tab. Select the Dollar Amount Per Unit from the Spending Rule drop down list. Assign any funds that should receive a distribution to the column on the right by using the right arrow (->).
These steps are only required once a year to determine the dollar amount per unit to apply.
6. You can now view the Estimated Spending Report (with Column Grouping and Drill Down). The report now accurately captures the spending rule by taking the 12 quarter ends from prior calendar year-end and distributes based on units owned as of 6/30/XX. Run the report with a post date of 12/31/XX. Both the annual amount and the monthly draw will show on the report.
Please check out this article for instructions on how to make distributions.