Valuation Dates
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Valuation Dates I am the treasurer for an investment club which started this pass May. I have just read that the valuation date for member payments need to be on the same day each month. We have been using the transaction date as the valuation date for the payments. Our partnership agreement does not have a specific date mention. We are an online club and members are responsible to have their payment into our broker by a specific date so the payments are deposited over a week. Starting next month I will pick a valuation date but is the past a problem? If it is, how do I amend the payments? Thank you, John Your Partnership Agreement MUST specify a valuation date (even if that specification is that the valuation date is the transaction date for all transactions). You do not have to use the same valuation date for all member deposits as long as you follow your PA and your members understand the ramifications of the choice your club has made.
Traditionally, a single valuation date was used (typically the end of the month or a date just before the monthly meeting date) because it was simpler for the treasurer who only had to do one official valuation per month. Since bivio can do daily valuations "on the fly" the single valuation date isn't necessary. However, if you use multiple valuation dates, you will find that members who deposit the same dollar amount on different days will receive a different number of units. This isn't a problem for the software, but could lead to confusion among the members.
Ira Smilovitz
In a message dated 12/17/08 14:27:58 Eastern Standard Time, ricej1969@bivio.com writes:
Thank you Ira for your answer. What is your advise in picking a valuation date. We are an online club and we begin discussing which stock to buy on the 3rd Friday of each month. We then purchase the stock sometime during the following week. Each member sends his/her payments directly to our broker and the payments arrive over a two week span, some after our meeting. Obviously, we want the valuation close to the "meeting" time but some payments will then come in after the valuation date. Thanks, John The choice of a valuation date is really up to the club. It's generally suggested that the valuation date be close to the meeting date so that it closely approximates the club's current value. The valuation date is used to determine how many units are awarded to member payments that arrive AFTER the date, so in your specific case, you would want the date to be earlier than the first monthly deposit would arrive. Otherwise, the earliest deposit(s) would be getting units at the previous month's rate.
Of course, all of this is moot in bivio, because you can continue to operate as you have -- using the transaction date as the valuation date. The only caveat I would offer is that your PA should specify a precise valuation date for any withdrawal requests. This way there can be no disagreement over whether a member is entitled to more or less on a withdrawal.
Ira Smilovitz
In a message dated 12/18/08 01:38:51 Eastern Standard Time, ricej1969@bivio.com writes:
Thank you, our PA does specify the valuation date for withdrawls. If we keep the valuation date as the transaction date does it mean that if the value of our portfoliio in a given month is increasing then I should mail in my check ASAP, but if it is decreasing in value, I should wait until it is due to get the most out of my money. John iras1 wrote: > The choice of a valuation date is really up to the club. It's generally suggested that the valuation date be close to the meeting date so that it closely approximates the club's current value. The valuation date is used to determine how many units are awarded to member payments that arrive AFTER the date, so in your specific case, you would want the date to be earlier than the first monthly deposit would arrive. Otherwise, the earliest deposit(s) would be getting units at the previous month's rate. > > Of course, all of this is moot in bivio, because you can continue to operate as you have -- using the transaction date as the valuation date. The only caveat I would offer is that your PA should specify a precise valuation date for any withdrawal requests. This way there can be no disagreement over whether a member is entitled to more or less on a withdrawal. > > Ira Smilovitz > > > > In a message dated 12/18/08 01:38:51 Eastern Standard Time, ricej1969@bivio.com writes: > > > > .aolmailheader {font-size:8pt; color:black; font-family:Arial} > a.aolmailheader:link {color:blue; text-decoration:underline; font-weight:normal} > a.aolmailheader:visited {color:magenta; text-decoration:underline; font-weight:normal} > a.aolmailheader:active {color:blue; text-decoration:underline; font-weight:normal} > a.aolmailheader:hover {color:blue; text-decoration:underline; font-weight:normal} > > Thank you Ira for your answer. What is your advise in > picking a valuation date. We are an online club and we > begin discussing which stock to buy on the 3rd Friday of > each month. We then purchase the stock sometime during the > following week. Each member sends his/her payments directly > to our broker and the payments arrive over a two week span, > some after our meeting. Obviously, we want the valuation > close to the "meeting" time but some payments will then come > in after the valuation date. > > Thanks, > John > > > Listen to 350+ music, sports, & news radio stations – including songs for the holidays – FREE while you browse. Start Listening Now! Hi John, That is exactly correct. This may or may not be a scenario you and your club members want to encourage. As Ira has pointed out, the most important thing is that all your members understand the effect of the valuation date on their percent ownership of the club. Laurie Frederiksen bivio Support ---- John Rice <ricej1969@bivio.com> wrote: > Thank you, our PA does specify the valuation date for > withdrawls. If we keep the valuation date as the > transaction date does it mean that if the value of our > portfoliio in a given month is increasing then I should mail > in my check ASAP, but if it is decreasing in value, I should > wait until it is due to get the most out of my money. > > John > > > > > > iras1 wrote: > > The choice of a valuation date is really up to the club. It's generally suggested that the valuation date be close to the meeting date so that it closely approximates the club's current value. The valuation date is used to determine how many units are awarded to member payments that arrive AFTER the date, so in your specific case, you would want the date to be earlier than the first monthly deposit would arrive. Otherwise, the earliest deposit(s) would be getting units at the previous month's rate. > > > > Of course, all of this is moot in bivio, because you can continue to operate as you have -- using the transaction date as the valuation date. The only caveat I would offer is that your PA should specify a precise valuation date for any withdrawal requests. This way there can be no disagreement over whether a member is entitled to more or less on a withdrawal. > > > > Ira Smilovitz > > > > > > > > In a message dated 12/18/08 01:38:51 Eastern Standard Time, ricej1969@bivio.com writes: > > > > > > > > .aolmailheader {font-size:8pt; color:black; font-family:Arial} > > a.aolmailheader:link {color:blue; text-decoration:underline; font-weight:normal} > > a.aolmailheader:visited {color:magenta; text-decoration:underline; font-weight:normal} > > a.aolmailheader:active {color:blue; text-decoration:underline; font-weight:normal} > > a.aolmailheader:hover {color:blue; text-decoration:underline; font-weight:normal} > > > > Thank you Ira for your answer. What is your advise in > > picking a valuation date. We are an online club and we > > begin discussing which stock to buy on the 3rd Friday of > > each month. We then purchase the stock sometime during the > > following week. Each member sends his/her payments directly > > to our broker and the payments arrive over a two week span, > > some after our meeting. Obviously, we want the valuation > > close to the "meeting" time but some payments will then come > > in after the valuation date. > > > > Thanks, > > John > > > > > > Listen to 350+ music, sports, & news radio stations – including songs for the holidays – FREE while you browse. Start Listening Now! Exactly. That's one reason why you may want a single, fixed valuation date. It eliminates the possibility of trying to time the short term market fluctuations.
Ira Smilovitz
In a message dated 12/18/08 11:36:15 Eastern Standard Time, ricej1969@bivio.com writes:
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