Applying interest

Whether interest must be applied or not can be set on a product.

When ‘Apply Interest’ is selected more options becomes available

Select the’ interest rate set’ to apply from the drop-down list

For investments, the system looks at the period between the deposit date of the money to be invested and the date on which the dealer Instruction is created to determine the period across which interest must be calculated. If the transaction involves more than one deposit, the ‘most recent’ bank entry date that has been matched would be used as the start date for interest. If a monthly contribution on a group has been matched, the deposit date on the monthly contribution would be the start date for interest.

As an example:

Amount to invest: R 500 000
Interest rate: 5%

Deposit date 21/05/2018
Dealer instruction creation date 23/05/2018

Interest period = 2 days

2*((R 500 000 x 5%)/365.25) = R 136.89

Should the ‘Invest days’ field contain a value different from 0, that value would be added to the interest period to determine the actual days across which interest must be calculated.

For the example above, should the field contain +1, the interest period would be 3 days.

If ‘Interest: only working days’ is ticked, only working dates excluding weekends and public holidays, as setup in the registered country of the Custodian, would be eligible for interest.

For Withdrawals, the system looks at the period between the transaction date of the dealer instruction and the date on which the payment batch to the investor is created to determine the period across which interest must be calculated.

As an example:

Withdrawal amount: R 100 000
Interest rate: 5%

Dealer instruction transaction date 21/05/2018
Payment batch creation date 22/05/2018

Interest period = 1 days

1*((R 100 000 x 5%)/365.25) = R 13.69

The withdrawal transaction is written from the working portfolio of the owner custodian on the product (where a different owner and asset holder custodian exist), to the investor’s contract. The interest earned within the bank account should be identified to the working portfolio once imported via the bank statement, therefor putting the working portfolio back into a neutral position.

Should the ‘Withdrawal days’ field contain a value different from 0, that value would be added to the interest period to determine the actual days across which interest must be calculated.

For the example above, should the field contain -1, the interest period would be 0 days and no interest would be added to the payment to the investor.

If ‘Interest: only working days’ is ticked, only working dates excluding weekends and public holidays, as setup in the registered country of the Custodian, would be eligible for interest.

Last Updated on 4 weeks ago by Hayley Jerram