Running Asset Rebalancing Entries

Running Asset Rebalancing Entries

This process is similar to running an edit report and posting any standard transactions in FIMS. It allows you to view your Asset Rebalancing data, run an edit report, and optionally create General Ledger Journal entries.

1. In the General Ledger module, click the Journal Entry supertab, and then click the Automatic Entries tab.

2. Select Asset Re-Balancing Module from the Automatic Entries list, and then click the Run Process button.

3. In the Asset Rebalancing module, click the Processing tab.

4. Select Asset Rebalancing Entries from the Rebalancing Processes list and then click the Run Process button. The Asset Rebalancing Entries window opens.

Asset Rebalancing Entries Window

5. Click the arrow in the Year and Period fields and select the fiscal year and period that you want to rebalance.

6. Do one of the following:

• If you want to include all assets on the Edit report, select the Show All Assets radio button.
• If you only want to include assets that vary from their targets, select the Only Show Assets with Variances from Targets radio button and enter the desired percentage of variance that you want to include on the report. Only variances greater than the percentage you enter will be included. The default value is 0%, which includes all variances.

7. (Optional) If you want to Use FACTS Fund Balances for Pooled Asset Accounts, select the associated checkbox.

8. (Optional) If you want to limit the Funds that you include on the report, enter a range of Fund ID, Division, Class, Type, Sub Type, or Asset Strategy codes associated with the desired Funds.

9. Enter the Apply Date that you want to use for the General Ledger Journal entries you will create.

10. (Optional) If you are using an Offset Fund, enter the appropriate Fund ID in the Offset Fund field. If you enter a Fund ID in this field, Asset Rebalancing will have no net effect on pool balances, because offsetting entries will be made to the selected Fund. This is useful if you want to defer making actual investment transfers, but want to restore Funds to their investment targets in the interim.

NOTE: If you use an Offset Fund, you should exclude it from the Funds that you are rebalancing (for example, by giving it a unique Strategy code).

11. (Optional) If you want to apply a Batch or a Reference number to the Journal Entries that are created through this process, enter the desired Batch and/or Reference information.

12. (Optional) Click the Defaults button to save your settings for future use. This will reduce manual entry during future sessions.

13. Click the Run GL Entries Edit Report button.

14. Verify the Send To destination, and then click the Run Report button. The Create G/L Entries for Asset Rebalancing report opens in the FIMS Viewer.

15. Review and verify the information on the report, and then click Create Entries on the FIMS Viewer menu bar. The Debit and Credit Information window opens.

16. In the Journal Key fields, enter the Journal Key code that you want to apply to the Debit and Credit entries (for example, IM to indicate Asset Rebalancing entries).

17. (Optional) Enter a Reference number for the Journal entry.

18. Enter the Apply Date for the entry.

NOTE: The default Apply Date is the date that you entered when you ran the Edit report, but you can change the date, if necessary.

19. Click OK. 

Determining When to Rebalance Investments

Regardless of specific policy or practice, the frequency of rebalancing depends on how quickly the variance grows between actual and target investment ratios. You can use the Asset Rebalancing report to monitor the fund-level variance, and the totals that must be transferred (or offset) to restore target ratios.

If you use an Offset Fund, you can rebalance at the Fund level within FIMS without making any actual transfers among your investments (at least temporarily). At some point the Offset Fund will exhaust its resources in a pool and you will need to make actual transfers (for example, buying securities with cash from a money market pool). You should record these transfers by making General Ledger Journal entries on behalf of the Offset Fund.

You may also use higher-level boundaries that, when reached, act as triggers for investment transfers – high and low exposure limits that are acceptable for your organization’s investments.

NOTE: The Aggregate button in the Set Pool Targets utility displays the overall investment ratio among pools. Refer to Setting Pool Targets for more information.

The Consolidated Asset Allocation report (Processes page) also displays global investment ratios.

You can optionally subtotal the Consolidated Asset Allocation report by investment type, so it can show the overall investment status, even if there is more than one pool with the same investment type.

NOTE: This report assumes that all accounts in the pool have the same investment class.

It can also report ratios for specified categories of Funds (for example, just for the endowed funds). Refer to Running the Consolidated Asset Allocation Report for more information.