We are frequently asked, “How is portfolio accounting different from fund accounting?” Though it would not be incorrect to say, “it’s the same thing,” at Nottingham we view the functions to be a bit different. Fund accounting for ‘40 Act funds uses share balances to calculate a net asset value per share. Portfolio accounting, or unitized accounting, allows for same-day trading of assets that do not typically settle on the trade day by calculating a daily unit price and allocating the total value of the portfolio by percentages of ownership.
Another way of looking at the comparison is the tax reporting. Net asset value reporting results in 1099s, while portfolio accounting results in K-1 partnership allocations. Nottingham is one of the few fund administration firms in the industry with 30+ years expertise multiple types of accounting treatments.
Nottingham has been a pioneer with two types of accounts where efficiencies in management and operations are generated through combining multiple participant accounts into much larger investment management accounts.