Solutions
Endowment fund
Capital held by an institution such as a university, museum or foundation.
No credit card. Nothing is charged until your first 30 days are over.
What this kind of fund is
A permanent pool where the point is the income it produces without eroding the capital, so what matters is a defensible valuation each period and a clear record of what was drawn.
What the administration actually involves
An endowment is judged on two things at once: that the capital is intact and that the draw was reasonable. Both depend on a valuation per period that holds still, and on a clean separation between money that was withdrawn and money that was lost. Those look like the same movement in a bank statement, and telling them apart after the fact is most of what makes endowment administration tedious.
In FundFlow a withdrawal is a unit redemption at the month's koers, recorded against the participant that took it. The capital line and the draw line are therefore different by construction rather than by annotation. You anchor the fund at one opening month, stating the koers and each holder's units, and close forward from there, so the track record starts where your existing records end.
What makes it hard
Drawdowns that look like losses
A pool that fell by the amount that was spent out of it has not underperformed. In a single running total the two are the same line, and the investment committee is told the wrong story.
A track record that restarts every time the system does
Moving from one file to another usually means the history stops. What the committee wants is a continuous series, including the years before the move.
Quarterly reporting rebuilt from scratch
Producing the committee pack by pulling numbers into a document each quarter means the format drifts and the figures have to be re-checked every time.
How FundFlow fits
A clean line between capital and what was withdrawn
Withdrawals are unit redemptions at the month's koers, recorded per participant, so a drawdown never gets confused with a loss.
A track record that starts where your records do
Anchor the fund with one opening month, stating the koers and each holder's units, and close forward from there.
Benchmarks for the investment committee
A blended benchmark on the NAV chart, with outperformance since inception, is one screen rather than a quarterly spreadsheet exercise.
Questions managers ask
Do we lose our history if we start now?
No, but it does not get imported either. You anchor the fund with one opening month: the koers and each holder's units at a date you choose. Everything from that month forward is computed and continuous. Earlier years stay in the records you already have, and the anchor month ties the two together.
Can we report quarterly rather than monthly?
You close monthly, because that is how the engine values the fund, and you report on whatever period the committee asked for. A report is composed from blocks and personalised per recipient, so the quarterly pack is the same document each time with new figures in it.
Read how these parts work
The parts of FundFlow this kind of fund leans on most.
Other kinds of fund
Pension fund
Money invested on behalf of employees and retirees.
How FundFlow fitsSovereign wealth fund
A government-owned investment fund, usually funded by national revenues or reserves.
How FundFlow fitsFoundation or charitable fund
Money belonging to a charitable foundation, often invested to support a long-term mission.
How FundFlow fits
Separate the capital from the draw, this month
Anchor the endowment at your last reported valuation, book this year's withdrawals as redemptions, and see the two lines come apart.
In your first session
- Create the fund and anchor it at your last reported valuation, so the track record continues rather than restarts.
- Enter the year's withdrawals as unit redemptions at the month they happened, per holder.
- Add the benchmark mix the committee judges you against and close a month to see both lines together.
No credit card. Nothing is charged until your first 30 days are over.