How managed fund orders are funded

Cash is used to fund:

• Applications to non-daily priced managed funds
• Listed securities buy orders

With the exclusion of non-daily priced funds, managed fund buy orders are funded from the proceeds from funds sell orders, if those sells are placed in the same session with buy orders. 

At present, there is no option to nominate managed funds orders to be explicitly funded from available cash, even if available cash balance is sufficient to fund all buy orders. 

Managed funds buy orders are funded from proceeds from funds sell orders, until all proceeds are allocated. Any remaining buy orders are funded from available cash. 

The allocation logic is below:

• Buy orders get allocated portions of funding sell orders sorted by original order amounts, from largest to smallest
• Where sell order amount is greater than next unallocated buy order amount, such sell order is used to fund multiple buy orders
• Where sell order amount is smaller than next unallocated buy order amount, that buy order gets split into multiple orders to be funded from proceeds from multiple sell orders 
• When all sell orders are allocated to fund buy orders, the rest of managed funds buy orders are getting funded from available cash
• All managed funds orders funded from proceeds are sent to market only after their corresponding sell order is completed.

Why is the same asset being purchased across multiple days when this was all funded through cash? 

Should a purchase of a managed fund asset be funded from proceeds from multiple sell orders, each portion of that purchase gets sent to fund managers as separate orders, and only when corresponding funding sell order gets completed. This can result in different portions of the original buy order being sent to market and completed across multiple days, depending on dates of completion of their funding orders.

What Wrap orders are created when I place both a managed fund buy and sell in the same order?

When a full redemption and associated buys are placed for a daily priced managed investment, the system will convert the buy dollar amounts to a percentage of the sale order. Once the sale proceeds are received, reciprocal buy orders are created and sent to market. This does not apply to SMAs which require sufficient available cash to fund the application order. 
 
Timeframes for sale proceeds from SMAs will depend on the amount of available cash being held in the SMA Model. 

Listed below are two examples of how full redemptions from managed investments (excluding SMAs) are processed. 

Example 1: One (1) full redemption being credited to two (2) buys

• Fund A $100,000 Full redemption (estimate only)
• Fund B $60,000 buy (60 per cent of sale proceeds will be applied to this fund)
• Fund C $40,000 buy (40 per cent of sale proceeds will be applied to this fund). 

The buy orders will be created and sent to market once the sale proceeds have been completed. Orders created: 3 (one sell and 2 buys). 

Transaction fees (if applicable depending on the product type): 3 (one sell and 2 buys). 

Example 2: One (1) partial redemption and two (2) full redemptions being credited to two (2) buys

• Fund A $20,000 partial redemption
• Fund B $50,000 full redemption (estimate only)
• Fund C $30,000 full redemption (estimate only) 
• Fund D $60,000 buy. This will be split as follows:
  • $20,000 buy (funded by $20,000 proceeds from Fund A partial redemption)
  • $40,000 buy (funded by 80 per cent of proceeds from Fund B full redemption)
• Fund E $40,000 buy. This will be split as follows: 
  • $10,000 buy (funded by 20 per cent of proceeds from Fund B full redemption)
  • $30,000 buy (funded by 100 per cent of proceeds from Fund C full redemption)

Once the proceeds from the sale of Fund B have been received, two buy orders will be generated based on the percentage of the original estimate value (80 per cent for Fund D, and 20 per cent for Fund E). 

Once the proceeds from the sale of Fund C have been received, one buy order will be generated based on the percentage of the original estimate value (100 per cent for Fund E). Orders created: 7 (3 sells and 4 buys). 

Transaction fees (if applicable depending on the product type): 5 (3 sells and 2 buys). 

Please note: if you’d like to place buy orders that will use available cash rather than using the funds from a sell down, please place the buy and sell orders in two different transactions. This involves placing either the buy or sell, authorising the transaction and then placing the other buy or sell in the following transaction.