Distributions

The stocks and shares invested in by the fund generate income (dividends and bond coupon interest). Where there is net income remaining after deduction of expenses such as management fees, trustee and custody fees, that income is distributed to unitholders.

Units are generally either income or accumulation. Income units means that the income is paid out to the investor. Accumulation units means that distribution income is rolled up into the capital of the fund.

The role of the Distributions team is to ensure that the amount of distributable income is properly calculated, that the distribution rate per share is then worked out and that the distribution is paid. Where distribution payments made by cheque (warrants) are not cashed by investors or payments made by BACS / CHAPS are not successful, then these need to be followed up on and unclaimed monies need to be reconciled for 6 years, at which point they can be paid back to the fund.

Interview Tip

There have recently been proposals to allow fund managers to pay across unclaimed balances to charities. See www.funds-axis.com for details.