Use parent and subportfolio structures
You can define portfolio structures with parent and subportfolios in FA. The parent portfolio aggregates positions from subportfolios, allowing you to get an overall picture of the investments, while keeping some investments separate. Reasons to use subportfolios include, for example, different custody accounts, different contracts or different fee structures. The chart below shows how subportfolios can be used for different needs.
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Parent and subportfolio structures are also useful when sharing accounts between portfolios. You can link subportfolio transactions to the parent portfolio’s accounts. Subportfolio accounts can also be shared to other subportfolios or to the parent portfolio.
Futhermore, parent portfolios can be used to aggregate values into a single reporting currency from subportfolios that are in different currencies.
Portfolio structures in reporting
When you define a portfolio structure with subportfolios, you can handle reporting in various ways:
When taking out a report on the parent portfolio, the subportfolios' positions and accounts are aggregated to the report. You can use this to get an overall picture of your client's investments or a part of them, since one contact can have one or more parent portfolios.
When taking out a report on a subportfolio, only the subportfolio positions and accounts are included. You can use this, for example, to report the holdings of only an insurance portfolio to the insurance company, while being able to report all the holdings in an aggregated report to the customer.
When subportfolios are in different currencies, you can use the parent portfolio to aggregate all the values to the same currency. See Aggregation of subportfolios in Basic info in the FA Back Reference for the options that are available.
Portfolio structures in reconciliation
When you are using either automatic or manual reconciliation, it can be useful to keep different custody accounts in separate portfolios. This way you can get the full benefit of the reconciliation functionality, as it is easy to see if there are missing or additional positions in the portfolios. You might also have cash accounts in different banks and using subportfolios, you are able to keep them in different portfolios.
Portfolio structures in fee calculation
If you have different fee structures for different types of investments, or multiple contracts with different fee structures for the same client, you can use a subportfolio structure to calculate fees differently in different portfolios. This could be used in for example the following scenarios:
The client has savings in equities and collective investment vehicles. You want to charge a management fee on the equities, but not the collective investment vehicles, as the management fee is already deducted from the market value of the product. In this case, the easiest is to keep the equities and the collective investment vehicles in separate subportfolios and link a cost formula only to the portfolio with equity savings.
The client has several different contract types with different fee structures. In this case, the easiest is to handle different contracts as separate subportfolios.
Related links
To find out how to create parent and subportfolio structures, see Portfolio window in FA Back Reference.
To find out how subportfolios can be included or excluded from rebalancing, see Rebalance window in FA Back Reference.