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10 Terms to Know Before Applying for a Fund Accounting Job

Updated on May 29, 2012

A career in mutual fund accounting can be a challenging and rewarding experience. There is considerable amount of technical jargon in this field. Review the terms below to help you prepare for an interview.

10 Terms to Know

1. Securities:

Stocks: Represents a percentage ownership in a corporation. If payment is received it is in the form of dividends.

Bonds: Instruments accounting for a loan made to a corporation or government.Payment is received in the form of coupons. Bonds are price as a percentage of 100.

2. Derivatives: Special types of securities that involve a contract between two parties.

Swaps: A contract between two parties to swap payments usually based on the performance of another financial instrument.

Futures: A contract to purchase something in the future at a price agreed upon in thepresent, regardless of future market happenings.

Options: A contract assigning the right to purchase or sell something (typically a stock), in the future at a set price (strike price) prior to a defined expiration date.

3. Cap Stock Activity:

Purchases: New buys into a mutual fund. Increases a funds shares outstanding and totalnet assets.

Redemptions: A sell of of mutual fund holdings. Decreases a funds shares outstandingand total net assets.

4. Transfer Agent: A transfer agent keeps record of the holders of a mutual fund. Capstockactivity is transmitted from the transfer agent to the accounting team on a daily basis.

5. Mark to Market: Current government regulations require mutual funds to mark their holdings to market each day. The goal of mark to market is to insure that a funds value accurately represent the current market value of its holdings. On a daily basis each position will have a price applied any change in price will hit a Unrealized Gain/Loss Account.

6. Corporate Actions: An action taken buy a company that changes the characteristics of its financial instruments. Corporate actions should never affect the value of funds holdings.

7. Domestic Based Fund: A fund that primarily prices and primarily uses US Dollars.

8. Foreign Based Fund: A fund that prices in a foreign currency.

9. Money Markets: A type of mutual fund that is very risk averse. Money Markets always price at $1. A money market invest in only the most credit worthy of sources usually issue by government authorities and large corporations.

10. Bloomberg Terminal: A computer with a subscription to Bloomberg Professional Service. Bloomberg provides the most real time information on securities and will be referenced often to determine characteristics of a funds holdings by Mutual Fund Accountants.

Special Skills Required

To be successful in the mutual fund accounting industry. It is imperative that you have the ability to quickly analyze very large amounts of data. Superior excel and programming skills can help in this area. Check out my other hubs for help in these areas.


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    • jonhaus profile imageAUTHOR


      6 years ago from Kansas City, Mo

      I assume you are referring to Electronic Funds Transfer?

      There are quite a few other things that could be included but I was trying to keep it to a brief overview.

      I would say EFT would not come up in an accounting interview. I would think that would be more of a custody related question.

      The company I work for is both the accountant and custodian for many of our clients. However, I have never worked on the custody side so I don't know much about it.

    • 4FoodSafety profile image

      Kelly Kline Burnett 

      6 years ago from Fontana, WI

      Great information. What about EFT - do you think this type of instrument should be understood?


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