Policy clause
"Emerging markets no more than 15%": how to write it, test it and evidence it
An emerging-markets cap limits exposure to countries the policy treats as emerging. It becomes testable once the policy names the classification, how a holding is assigned to a country and whether frontier markets count. Acclimetry bands the Emerging value of a governed market classification with the attribute exposure template.
Investment in emerging markets may not exceed 15% of the portfolio.
attribute_exposureQuestions to settle before it can be tested
- Whose list: an index provider's classification, or the policy's own annex? Hold it as a governed field or a published taxonomy.
- Assigned how: country of listing, domicile or revenue? A London-listed miner with assets abroad can fall either side.
- Frontier markets: inside the 15% or not? Give them the same value if they count.
- Funds and cash: a global fund is classed by its own value unless looked through, and exempting cash raises every weight slightly.
As a testable rule
Attribute exposure template, attribute field:MARKET_CLASS, one band: Emerging, hard maximum 15%, warning maximum 13%, cash exempt. The weight is over the measured book. A holding with no market class withholds a compliant reading, because it might be emerging.
A testable wording
Holdings classed Emerging under the classification in Annex C, assigned by issuer domicile, may not exceed 15% of the portfolio excluding cash. Frontier markets are not included, and pooled funds are classed by their stated investment region.
See sector, country and region bands and look-through for funds.
Worked example
Holdings classed Emerging are 12% of the invested book, inside the cap, but an unclassified fund could be emerging: the rule reads not evaluated.
Rule template:attribute_exposure attribute: field:MARKET_CLASSbands: group=Emerging, hardMax=15, warnMax=13exemptClassNames: Cash
| Holding | Class | Market value | MARKET_CLASS |
|---|---|---|---|
| UK equities | Equities | 2,000,000 | Developed |
| US equities | Equities | 2,800,000 | Developed |
| Europe ex-UK equities | Equities | 1,450,000 | Developed |
| Emerging markets equity fund | Equities | 750,000 | Emerging |
| China A-share fund | Equities | 150,000 | Emerging |
| Global smaller companies fund | Equities | 350,000 | (blank) |
| Cash | Cash | 500,000 | (blank) |
| Group | Status | Value | Bounds | Headroom to the hard bound | Code |
|---|---|---|---|---|---|
| Emerging | Not evaluated: data quality | 12% | ≤ 15% warning ≤ 13% | 3% 1% to warning | UNCLASSIFIED_ATTRIBUTE_WEIGHT |
UNCLASSIFIED_ATTRIBUTE_WEIGHT: Part of the measured population carries no value for the attribute this rule groups by, so the weight cannot be attributed.
Largest contributors: Emerging → Emerging markets equity fund 10%, China A-share fund 2%
Computed at build time by the Acclimetry rule engine (backend commit 8197063); the same code runs in the product.
What each monitoring run records
Each run stores the emerging weight, its state, headroom and the holdings classed Emerging, with the unclassified count and weight. The result names its grouping source, here a governed field, so the classification behind it can be checked. A not-evaluated result is followed up as a data-quality case, not read as a pass.