Help please! regarding NAV/Cash+Unit reconciliation

[jlcee]

Hi guys,

was hoping to get some advice regarding a couple of things. My bro is off to an interview tomorrow and we were discussing the job spec. It states on the job spec that duties will include NAV (Net Asset Value) Calculations as well as Cash+Unit reconciliations.

Could somebody give me an example of what this would entail? I understand that the reconciliation and calculations are done so that internal/external info matches and therefore a better understanding of current position etc. so would cash+unit reconciliation be as simple as noting the buying and selling of shares, and entering this data to show the reconciliation so there isn't any discrepancies?

As for the NAV calculations, my thought is this is just current Assets - Liabilities. But what liabilities would they be? in the context of managing a fund/portfolio? is it things such as commission paid? or liabilities mean things such as derivatives or hedging risk, inflation etc.?

anyhelp is much appreciated

Thanks in advance

 

[PieterSteidelmayer]

As for the NAV calculations, my thought is this is just current Assets - Liabilities. But what liabilities would they be? in the context of managing a fund/portfolio? is it things such as commission paid? or liabilities mean things such as derivatives or hedging risk, inflation etc.?

Tell your 'bro' that he can forget all the textbook stuff about NAV which all the other bright young things will be coming out with and focus on the fact that NAV tells you where you were - it tells you how volatile your portfolio was.

If you figure the future volatility will be higher than it is currently, you run a lower VAR on your current portfolio; if you think volatility will be lower, you run a higher VAR on your current portfolio.

Too may think the essence of VAR is in the parameters and the construction of VAR rather than using it as a tool for the purpose for which it was designed.

 

[PieterSteidelmayer]

Oh, and tell your 'bro' leaving stuff like this until the night before the interview is PPP. If he's not serious then he shouldn't be taking anyone else's space.

 

[jlcee]

Thanks for the reply...

So calculating the NAV allows me to asses the past risk levels of my portfolio? and therefore help make adjustments depending on analysis of future volatility?

As for calculating NAV? could you give me an example of how this would look?

As for the 'bro' insinuating I'm making it up, i don't see the benefit of doing this lol?? and as for leaving it to the last minute, it is a entry level role where they require nothing but a school leaver, they don't want anybody with further qualifications, or require somebody to know anything in detail, it's more of a personality interview...However, i have a degree in economics and was unsure as to what this would entail, and couldn't really help him out as i think he expected...so therefore i asked here

 

[PieterSteidelmayer]

I wasn't insinuating anything. I just find the whole 'bro' vernacular laughable.

I don't give a fig what the level of the role is, leaving it till the last minute is not acceptable.

You have a degree in economics and couldn't point him in the right direction for NAV? So you come here to ask. You burn all your textbooks?

 

[jlcee]

lol apologies, when i mean bro i meant my actual brother, not that that probably makes it sound better

I'm after a working example of what it would look like in practice, the sort of calculations you may be doing, how you would go about it if you was working in the office, which I'm still yet to find, even with your input....by taking my question to a forum i was hoping for input from different people with different experiences in doing such duties. NAV calculations in this context never came up in my degree unfortunately hence my curiosity.

 

[teflon142]

furkin 'ell.

fancy yourself much?

In between college and uni I worked on the cash recs team in a major bank. Just writing down whatever I can remember... (it was a long time ago!)

My daily role was to investigate and reconciliate bits of cash that the system had thrown up in error. For instance, often dividend or interest payments were flagged in taxed-wrapped accounts (Isa's etc) because of some regulatory problem... like an out of UK address, incomplete NI number, stuff like that.

I had to then find out where the payment had come from and why it was being flagged, sort it if possible, and match everything up in a spreadsheet. Once I had tallied it all up my "job" was done for the day.

Adjacent to the cash team were the equity team, who followed up trades that had been flagged. Can't really say much about this because I didn't work on it.

I guess my tips to your bro would be to emphasise any IT skills, expecially excell, VBA and stuff. Obviously you need a head for figures, and if it is anything like where I worked, nobody else will understand what you do - so you gotta be the sorta kid who can keep his head down and crack on with it. It's also important to stay on top of the workload, and make sure each day's recs really are done properly, because you can't "finish them off tomorrow".

 

[teflon142]

Given the nature of the roll, any NAV cals you rbro might have to do are gonna be pretty straightforward. In all liklihood there will be a s'sheet / model set up already and all your bro has to do is to input closing prices and divs. My hunch is that it'll all be EOD stuff from the day before.

You can always google NAV for examples, but at a stab I'd say it will be soemthing like:

SUM(Closing price of stock * qty of stock owned by the fund)
Add any dividends in
add any cash held + interest
maybe account for the odd stock split or rights issue
stuff like that

another section on the inflows and outflows of cash into the fund

then compare the two.

It will be more of a data entry roll tbh. He won't be expected to be able to calculate the NAV for reporting purposes off his own back or anything like that, but just follow the instructions of the person who actually knows what they're doing.

Ignore all this stuff about VAR, that is not relevant at all. It's just PS trying to flex his muscles and looking a bit of a dick in the process.

 

[PieterSteidelmayer]

teflon, for once, you caught me out.

I read it as VAR and he was asking about NAV. I even quote it as NAV and then go on about VAR.

Good man and a well deserved pounce. I'm glad the jackals get their prey once in a while. Keeps me on my toes.

 

[teflon142]

teflon, for once, you caught me out.

I read it as VAR and he was asking about NAV. I even quote it as NAV and then go on about VAR.

Good man and a well deserved pounce. I'm glad the jackals get their prey once in a while. Keeps me on my toes.

I stand by my point.

I firmly believe that the vast majority of your posts are utter tripe, and being so condescending in the process makes one look like a fool.

"The Dunning–Kruger effect is a cognitive bias in which unskilled individuals suffer from illusory superiority, mistakenly rating their ability much higher than is accurate."

 

[PieterSteidelmayer]

My bro is off to an interview tomorrow and we were discussing the job spec.

How did he do?

 

[teflon142]

PS why are you reporting these posts? Just because you don't like them? Or they hurt your feelings?

What gives?

 

[PieterSteidelmayer]

PS why are you reporting these posts? Just because you don't like them? Or they hurt your feelings?

What gives?

They're in breach of site guidelines. I don't care one way or the other how you feel about me or what I post or how I post, but I do like a level playing field. Which is why I take the trouble to tell you when I report your posts so you know where I'm coming from.

As for liking them or not - who cares? Your opinion is I am sure important to you, but nobody else cares about it, or you, or me or anything else it would seem for that matter. Total apathy abounds.