This article provides some insight into best practices for selling units when spending occurs, which depends on the spending rule type being used.

Not Selling Units

If you’re using a spending rule based on pool unit price, i.e. Percent to average of Pool, Percent to average of Unit price, or Dollar amount per unit (DPU), it is best practice to not sell units. This works very well but only when ALL funds participate in the same spending rule and there are no distribution rules being used. An exception to that is when a fund does not spend, we can use a Distribute All, Reinvest All distribution rule. 

Many customers find the option to not sell units favorable to their draw because the calculation for DPU is based on overall units of pool. Reducing units will decrease the calculated spend overall. This is especially evident with a quarterly draw based on a recent calculation date (attempt to include recent gifts), the amount of the quarterly draw will likely decrease each quarter.

Selling Units

It is best practice to have distributions sell units when the spending rule is based on fund market values.  In this scenario, the spend DPU calculation is based on each specific fund.  This also allows more flexibility in assigning different spending rules/rates across pool and for setting up spending exceptions/distribution rules.