Introduction to Fund Pricing and Valuation - 12/07/2018
The Training Environment For Financial Services

Introduction to Fund Pricing and Valuation

12 Jul 2018, London

9:15am to 4:45pm

Course Outline & Objectives

Fund Managers, Administrators and Depositaries all need to ensure funds are fairly and accurately priced. Today, this is a greater challenge than ever because of a wider range of assets, increased number of share classes and their expense components, plus  the challenges extra reguation brings. Demands for increased efficiency and robust risk management processes only add to the complexity.

This focused one day workshop will provide delegates with a thorough understanding of NAV calculation, the challenges of share class accounting, fair value pricing, illiquid securities and derivative instruments. The course will also address pricing errors using examples and the measures that could be used to identify and prevent them.

The course will give practical answers to questions such as:

  1. How are pricing errors prevented
  2. What controls does the Depositary/Trustee expect
  3. What to do when a pricing error occurs
  4. How much of your functions can be outsourced
  5. What oversight arrangements should be in place
  6. How are derivatives handled
  7. What are the challenges with volatile markets
  8. What should the service level agreement contain

Who will benefit?

This event will be of value to anyone seeking a practical introduction or refresher to fund accounting. This will include individuals responsible for fund accounting, NAV/valuation production, taxation, oversight and operations in Fund Administration, Depositaries and Third Party Administrators.

Training Approach

This workshop uses a combination of trainer input, interactive syndicate work and case studies. Group size is kept to a maximum of 16 to ensure a high quality learning environment.

Course Tutor

Vivien Crayston has over 26 years’ experience in fund administration, transfer agency and fund accounting for both traditional and hedge funds. She has occupied senior fund administration positions in the UK and South Africa and has been a management consultant for over 10 years, advising both large and boutique asset managers. Vivien is a Chartered Fellow of the Chartered Institute forSecurities and Investments and holds status of MSCI.

Course Programme

Session Content
Introduction to fund valuation
  • How is a fund valued?
  • Key components of the NAV
  • Dual and single pricing
  • Creation and cancellation of units
  • Forward -v- Historic fund pricing
  • Valuation points
  • Role of the FCA
Share class accounting
  • Why there are different share classes
  • Apportionment of capital and income
  • Currency share class hedging
  • Controls over share class accounting
  • Apportionment of capital and income
Difficult to price securities
  • What securities cause difficulty
  • Valuation techniques
  • Asset backed securities
  • OTC derivatives
  • Key controls
Dilution levies and swinging pricing
  • How dilution occurs
  • Dilution levy -v- swinging pricing
  • Developing an effective dilution policy
Fair valuation techniques
  • When Fair Valuation Pricing (FVP) is needed
  • Market timing
  • Applying FVP 
  • International best practice
  • Controls and governance over FVP
Developing effective control environments
  • Controls over valuation of individual securities
  • Income and expense accruals
  • Daily fund level checks
  • Periodic checks
  • ISAE3402 Control Reporting
Pricing errors
  • What is a pricing error
  • How pricing errors arise
  • Key controls for early identification
  • Process for resolution of pricing errors 
  • Compensation calculations
Performance fees
  • Calculating performance fees
  • Target benchmarks and hurdle rates
  • Internal procedures and controls
  • Why use performance fees
  • Trade capture and processing  
  • Mark to market, variation margin
  • Using pricing models  
  • Accounting for derivatives as capital or income
  • Taxes applicable to UK authorised funds  
  • UK -v- Ireland -v- Luxembourg 
  • The Investment Management Exemption  
  • Equalisation
  • What is the UCITS IV Directive
  • Report and Accounts
  • Long -v- short terrm reporting
  • Risk disclosures
  • Role of the SORP and IFRS
Roles and Expectations of the Depositary
  • Review of the managers systems and controls  
  • OTC derivative valuation  
  • Pricing errors  
  • Dilution policies and FVP
Governance of fund accounting
  • Service Level Agreements  
  • Identification of key SLAs  
  • Key Risk Indicators 
  • Key Performance Indicators

This course can be delivered in-house at a time and location to suit your business and tailored to suit your people and organisation. We can also create bespoke training when something very specific is needed.Please contact us to discuss your requirements in more detail and at no obligation.

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