Investments

Money the trustee sends to the fund manager is invested so the trust grows. The fund manager does the investing; the trustee and the employer watch it, read-only.

The building blocks

Concept	What it is	Who
Portfolio framework	A trust’s portfolio, and the policy allocation: the percentage to hold in each asset type. Must total 100%.	Fund manager creates and activates
Asset	Something the portfolio holds: a government bond, a fixed deposit, shares, property and so on. Each asset type has its own details.	Fund manager
Carrying value	What an asset is currently recorded as worth.	Changed by valuations and write-offs
Asset register	Every asset and its value on a given date.	Calculated live, or frozen in a snapshot
Month-end snapshot	A frozen copy of the register at month-end. Reports and ROI are built from it.	Fund manager creates
Allocation variance	How far the actual mix is from the policy mix.	Calculated
Benchmark	A reference rate, such as the 91-day Treasury bill rate, to compare returns with.	Admin maintains and assigns

What each action does to the money

Action	Trust cash with the fund manager	Portfolio value
Buy an asset	Down by the purchase price	Up by the same amount
Record income (coupon, interest, dividend)	Up	Unchanged
Record an increase or decrease in value	Unchanged	Up or down
Write off an asset	Unchanged	Down to zero for that asset
Return money to the trust	Down	Unchanged

So the trust’s total wealth is cash with the fund manager + portfolio value + cash in the trust itself.

Lifecycles

Portfolio framework
Asset
ROI month

Assets can only be bought for an active framework, and only in asset types in its policy allocation.

Reading allocation variance

Each asset type is compared with its policy percentage:

Status	Meaning	What to do
Within tolerance	Close to policy.	Nothing.
Watch	Drifting from policy.	Keep an eye on it.
Outside tolerance	Too far from policy.	The trustee asks the fund manager to rebalance, or they agree a new policy.

A large positive variance means the portfolio holds less of that type than the policy requires — for example after a write-off.

Reading ROI

ROI is the return on the money invested over a period, built from month-end snapshots.

Use a month-end date such as 30 September; other dates have no snapshot.
Annualised ROI shows N/A until there is enough history.
Against benchmark shows N/A until the administrator assigns a benchmark to the portfolio.

Who sees what

	Fund manager	Trustee	Employer
Frameworks, assets, income, valuations, write-offs	Creates	—	—
Asset register	Yes	Yes	Yes
Allocation variance	Yes	Yes	Yes
Asset ROI	Yes	Yes	Yes
Portfolio ROI	Yes	Yes	Yes

Guides: fund manager, trustee, employer.

Start here

Workflows

Understanding the numbers

Rules and reference

The building blocks

What each action does to the money

Lifecycles

Reading allocation variance

Reading ROI

Who sees what

​The building blocks

​What each action does to the money

​Lifecycles

​Reading allocation variance

​Reading ROI

​Who sees what

The building blocks

What each action does to the money

Lifecycles

Reading allocation variance

Reading ROI

Who sees what