Category / Section
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 type | Impact on Cash Balance | Impact on Account Value |
| $100k capital deposit | goes up $100k | goes up $100k |
| $50k allocated to investment | goes down $50k | no change |
| $25k earnings received | goes up $25k | goes up $25k |
| $10k of earnings reinvested | goes down $10k | no change |
| $5k ACH distribution | goes down $5k | goes down $5k |
| $100k investment exits | goes up $100k | no change |
| $5k Pro-rata share of expenses charged | goes down $5k | goes down $5k |
The manager account can have a few additional transactions. Below is the impact on the account.
| Transaction type | Impact on Cash Balance | Impact on Account Value |
| $500k new investment created | goes down $500k | If 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 investor | goes up by $50k | goes up by $50k |
| $5k monthly expenses logged | goes down by $5k | goes down by $5k |
| $5k pro-rata expenses distributed to investors at end of year | goes up by $5k | goes up by $5k |
