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Cash Balance - what it is and how it works

Avestor's customizable funds have a unique capability called a cash balance for investors.  While all capital sent to the fund is considered invested in the fund, the cash balance capability allows fund managers and investors view what portion of their capital has been allocated to investments and what portion remains available for further allocation or distribution back to the investor.

The account value is the total value of the account that includes both allocated capital and cash balance (unallocated capital).

Here is how cash balance works as it compares to account value for an investor's account.
Transaction typeImpact on Cash BalanceImpact on Account Value
$100k capital depositgoes up $100kgoes up $100k
$50k allocated to investmentgoes down $50kno change
$25k earnings receivedgoes up $25kgoes up $25k
$10k of earnings reinvestedgoes down $10kno change
$5k ACH distributiongoes down $5kgoes down $5k
$100k investment exitsgoes up $100kno change
$5k Pro-rata share of expenses chargedgoes down $5kgoes down $5k
The manager account can have a few additional transactions. Below is the impact on the account.

Transaction typeImpact on Cash BalanceImpact on Account Value
$500k new investment createdgoes down $500kIf cash balance has $500k, no change
If cash balance has less than $500k, then negative cash balance causes account value to decrease
$50k allocated to an investorgoes up by $50kgoes up by $50k
$5k monthly expenses loggedgoes down by $5kgoes down by $5k
$5k pro-rata expenses distributed to investors at end of yeargoes up by $5kgoes up by $5k

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