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As open-architecture platforms continue to expand the
menu of investment options available to plan participants, value-added
services are required to integrated these options seamlessly on recordkeeping
platforms. MG Trust and MSCS provides Customers with unitization services:
an accounting process that translates a portfolio, either of a single
security of multiple securities, into a unit price for daily valuation
purposes eliminating different settlement issues.
Unitized services are required to allow plan participants the ability
to perform same day exchanges across fund options when the asset being
unitized cannot be settled on a Trade date plus one (T+1) basis as is
the standard for mutual fund trades. The value of our unitization services
becomes clear when you consider what occurs when mutual fund trades settle
on a T+1 basis and common stocks settle on a T+3 basis; without them,
a participant selling a common stock and purchasing a mutual fund would
have un-invested cash for three business days waiting for the common stock
proceeds to be available before they could be reinvested into the mutual
fund of his or her choice. This process further complicates the reconciliation
process for the plan provider.
MSCS provides unitization to allow retirement plan participants true same
day exchanges among all the plans investment options.
- Company stock (publicly traded having adequate
liquidity)
- Actively managed model portfolios (mutual
funds in an asset allocation portfolio as a plan investment option);
- Actively managed Stable Value portfolios
(managed single or multiple GIC securities as a plan investment option);
- Actively managed stock and bond portfolios;
and
- Actively or passively managed ETFs
as a plan investment option.
- The unit price is made up of the securities’
(typically equities and/or bonds) market value and cash value
- Unit values are determined daily
- Participant have ready access to their interest/values
without extensive “blackout” periods (typically T+1)
- Dividends from securities are paid into cash and
are reflected in the unit price
- Security purchases are made by Investment
Manager when the cash value percentage is outside of required amount
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