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Since there is no unit of holding we treat the <committed amount> as the Quantity and backsolve the <price> so that the market value ties out.
This allows us to hold a quantity and a price for an item that does not provide these.
b) Redemptions and Distributions
PE funds commonly do not define which part of a payout is a capital redemption and which part is an interest or dividend component (since there is no unit holding in the first place).
As such, we tag all payouts as Distribution.
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Distributions are counted as profit.
Usually, the amount that is paid out as a distribution is offset by an equivalent drop in the remaining market value of the fund - unless other fund assets have been substantially remarked.
Example: Client has a 1m commitment to a PE Fund with market value 750k, the client receives a distribution of 250k and the new market value is (near) 500k.
The Distribution is a profit and the market value change is a loss, so the overall profit of the fund has not changed.
The quantity that the user holds still shows as 1m since that was the committed amount.
c) Contributions
The category contribution functions in a similar way to a distribution, just in the opposite direction.
This means we can attribute the payment to correct security such that the profit will be accurate, while at the same time not impacting the quantity of the holding.
Example: Client has a 1m commitment to a PE Fund with market value 500k, the client pays in an additional 250k and the new market value is 750k.
The Contribution is a loss (since it is money spent) and the market value change is a gain, so the overall profit of the fund has not changed.
The quantity that the user holds still shows as 1m since that was the committed amount.
d) Set up and Purchases
For existing accounts in our system that see a new investment in a PE fund, we would use transaction type <Purchase> to generate the holdings.
The Quantity used in the purchase is equal to the committed amount and the cash account is reduced by the settlement amount.
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