Feb 23, 20222 min read

Hegde Fund and Mutual Fund Accounting Process-CAPITAL STOCK Activity

Cap Stock Is one of the key activity in the Fund Accounting Process . You may see this activity in Hedge fund and Mutual Fund Domain. This Capstock activity deal with the Redemptions , Subscriptions and Withdrawals of Fund Units and Processor who is working with the same process they do the reconciliations of Book price and information to the AMC to accept the Redemption or Subscription request and release the fund for the same Investors.

How Fund house received the Subscriptions or Redemptions request and from whom?

Most probably they received the request from the brokers like Zerodha , ICICI , Grow and Asset management Companies like UTI, SBI AMC, etc.

Once received request the team work on it and accept the Subscriptions and Redemptions accordingly .

Once done an everything team send the instruction to the Agent banks to release the Payment. to the Investors .

In most of the Companies transfer agent they do work on this Capstock activities .

Do subscriptions and Redemption affect on NAV?

I am not sure weather you are about this or not , but there is no Impacts of Capstock on NAV

because Units value we record on liability side of balance and Total Holding value we record on Assets side of the Balance sheet so, when we received the Subscription and redemptions request then we reduce the Liability and assets equally so, there wont be any impact on the NAV . ( if the redemptions and subscriptions size very large then in that case you may see that some impact on NAV due to heavy sell and other broker expenditure)

See the below for the better understanding about the Capstock.