Setting up Asset Rebalancing and Investment Targets

Setting up Asset Rebalancing and Investment Targets

The primary set up task is establishing the per-account investment targets for each Fund (the targets to which assets will be rebalanced). However, before you can accomplish this task, you should complete two general configuration steps:

• Create a Pool Record: In FACTS, create a Pool record for every asset account that will participate in Asset Rebalancing. Refer to Creating a Pool Record in the FACTS module for more information.

NOTE: You can create a Pool record for accounts that are not actually pooled, (from which returns are not allocated to multiple Funds). For example, if you want your checking account to participate in Asset Rebalancing (for cash management purposes), or if a Fund has assets in a non-pooled account that you wish to include, those accounts must have a FACTS Pool record. Make sure that you clear the Create Fund-Level Entries checkbox when you add the Pool record. This will prevent transactions from automatically being created when you post General Ledger Journal entries to the checking account. You should also clear all of the other checkboxes. No Deposit or Disbursement accounts are required. On the GL Accounts tab for the Pool record, enter the G/L Account Number for the asset account and leave the remaining fields blank.

• (Optional) Set up the Asset Management tab: In System Options set the Fund’s Asset_Management_Tab option to Yes. This adds the Asset Management tab to the Fund Management module. This tab is a duplicate of the Fund Targets tab in the Asst Rebalancing module, but it is convenient to be able to access it via the Fund record. Refer to System Options – Funds and the Asset Management Tab in the Fund Management module for more information.

Once you complete these steps, you need to set the target investment ratio for participating Funds. A target (percentage or fixed) is required for each asset account that you want to rebalance, for each Fund. Targets are stored in the Account record and are maintained separately for each Fund. You can set targets individually, globally, or for specified groups of Funds.

Setting Investment Targets for Individual Funds

A Fund can maintain a unique investment mix if you set custom targets for it. Operationally, it is no more difficult to maintain individual investment mixes, so you might consider offering this option as a donor service.

You can also individually set Fixed dollar targets for one or more asset accounts.

NOTE: You should either give the Offset Fund a Strategy code that eliminates it during the rebalancing process or not set any targets for the Offset Fund.

1. In the General Ledger module, click the Journal Entry super tab, 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, select the desired Fund from the Data Grid, and then click the Fund Targets tab.

NOTE: If the Data Grid is not open, click the Search button (looks like binoculars) on the toolbar to find the desired Fund.

Fund Targets Tab

4. Click the arrow in the Year and Period fields and select the fiscal year and period that you want to set the targets for.

5. In the Target % field, enter the target percentage for the Fund.

6. Click the Save button on the toolbar.

7. Repeat this process to set the targets for any additional Funds. 

Setting Targets for a Group of Funds Based on the Asset Strategy Code

The most flexible and easily maintained method of setting targets for a group of Funds is to record a template of investment mix targets for an Asset Strategy code, and then add that code to the Fund record.

The Set Strategy Targets utility can then copy the targets to the asset account records for each coded Fund. If the strategy changes for the group of Funds, you can update the code targets and re-run the utility.

1. Create an Asset Strategy code for each standard investment strategy (for example, Aggressive, Balanced, Capital Preservation, or Fixed Income). Refer to Maintaining Asset Strategy Codes for more information.

2. Add the appropriate Asset Strategy code to each participating Fund record. You can do this on a fund-by-fund basis, either via the Fund Targets tab in Asset Rebalancing, or the Asset Management tab in the Fund Management module. Refer to the Asset Management Tab in the Fund Management module for more information.

TIP: You can use the Mass Fund Field Assignment utility to globally populate this field based on other Fund coding. Refer to Mass Assigning Fund Fields in the Fund Management module for more information.

3. Run the Set Strategy Targets utility to copy the code targets to the Asset account records that correspond to the Pools. Refer to Setting Asset Strategy Targets for more information. 

Setting Targets for a Group of Funds Based on Other Fund Codes

This approach to setting targets for a group of funds does not rely on a pre-set template of target percentages. You can use existing Fund codes to define the group of Funds, and then enter the desired targets for the group at run-time.

With Asset Strategy code targets, you can only set percentage targets, but this method also allows you to set flat dollar amount targets, and to indicate asset accounts that should be skipped during the rebalancing process.

Refer to Setting Pool Targets for more information.

Setting Targets Based on Existing Account Balances

When you first set up asset rebalancing, you may want to set percentage targets that reflect the actual current asset mix among pools. You can then change targets slowly, to avoid large initial asset transfers.

Refer to Building Ratio Targets for more information.

Rolling Targets to the New Fiscal Year

Since targets are stored in the Account (GLYR) record, they are only valid for one fiscal year. In order to perpetuate the current targets into the next year’s Account records, run the Copy Prior Year Targets utility. Refer to Copying Prior Year Targets for more information.