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Handle position and account interest

You can use the FA system to calculate, track, and capitalize account interest for fund portfolio positions and cash accounts. The system calculates accrued interest every time you calculate NAV or fees if you set up a separate fee workflow (see Ongoing fees).

The following sections describe how you can handle account interest for fund portfolio holdings and fund cash accounts, including how to capitalize accrued account interest.

Calculate accrued interest on fund portfolio positions

Accrued interest on the fund portfolio holdings is calculated automatically based on the fixings information entered for securities in FA Back. To learn more, see Bonds in FA User guide.

You can track the accrual for fund portfolio holdings in the NAV overview in the "Accrued interest" row (see View and check NAV calculation).

Calculate and capitalize accrued account interest

The system uses the following formula to calculate accrued account interest:

Equation 25. 
Accrued interest=Account balance⋅(Base interest rate+spread)Number of days in a yearAccruedinterest=\frac{Accountbalance⋅\left(Baseinterestrate+spread\right)}{Numberofdaysinayear}


In this formula, account balance is the balance at the beginning of the day, base interest rate is determined by an index or a fixed or floating rate, and spread is interest on top of the base rate that you can specify depending on the account balance.

Set up account interest

To set up account interest for a fund, you need to specify the account interest details by doing the following:

  1. In the NAV status view, click on the fund to open the side pane and then open the Fund wizard by clicking the edit-fund-group.png icon.

  2. In the Basic info tab, select a cash account, click on Interest details, and fill in the fields. For field descriptions, see Interest details.

  3. Click Save.

The system now starts accruing interest on the account. You can track the accrual in the NAV overview in the "Accrued account interest" row (see View and check NAV calculation).

Capitalize accrued interest in FA Back

To capitalize the interest accrued by fund investments, follow the instructions in steps 2 and 3 in Set up and run account interest (FA User guide). You can skip step 1 because fund account interest is already set up.

The system creates the capitalization transaction when you execute the account interest run. You can also schedule the run for later.

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