Policy clause
"Equities between 40% and 60% of the portfolio": how to write it, test it and evidence it
An allocation range keeps one asset class between a floor and a ceiling. It becomes testable once the policy says what counts as equities, what the percentage is of and how multi-asset funds are treated. Acclimetry holds it as a band in an allocation-range rule, with warning bounds inside the range so drift shows before a breach.
Equities: minimum 40%, maximum 60% of the portfolio.
allocation_rangeQuestions to settle before it can be tested
- What counts: listed shares only, or equity funds, investment trusts and private equity too? The band covers one group of the chosen classification level.
- Denominator: the whole portfolio including cash and illiquid assets, or invested assets only? Acclimetry divides by the net market value of the measured positions.
- Multi-asset funds: a balanced fund counts under its own class. Reading through it needs fund compositions and the look-through template.
- Breach or drift: leaving the range may be a breach or a trigger to rebalance. The result is the same; the policy decides what follows.
As a testable rule
Allocation-range template, dimension class, one band for Equities: hard minimum 40%, hard maximum 60%, warning bounds at 42% and 58%. The weight is the group's market value over the net market value of the measured positions. A value exactly on a hard bound is compliant, and warning bounds carry no tolerance.
A testable wording
Listed equities and equity funds, valued at market, must make up between 40% and 60% of the total portfolio, including cash. Multi-asset funds are classed separately and are not looked through.
Bands like this live in the strategic asset allocation section; hard and warning limits explains the inner band.
Worked example
Equities of 5.86m are 58.6% of the 10m portfolio: inside the 60% ceiling, past the 58% warning, with 1.4 points of headroom.
Rule template:allocation_range dimension: classbands: group=Equities, hardMin=40, warnMin=42, warnMax=58, hardMax=60
| Holding | Class | Market value |
|---|---|---|
| UK equity fund | Equities | 2,200,000 |
| Global equity fund | Equities | 3,660,000 |
| UK Treasury 3.25% 2033 | Bonds | 2,100,000 |
| Corporate bond fund | Bonds | 1,340,000 |
| Property fund | Property | 400,000 |
| Cash | Cash | 300,000 |
| Group | Status | Value | Bounds | Headroom to the hard bound | Code |
|---|---|---|---|---|---|
| Equities | Warning | 58.6% | 40% – 60% warning 42% – 58% | 1.4% -0.6% to warning | ABOVE_WARNING_MAXIMUM |
ABOVE_WARNING_MAXIMUM: The measured value has crossed the early-warning maximum but not the hard limit.
Largest contributors: Equities → Global equity fund 36.6%, UK equity fund 22%
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 band's state, weight, bounds, headroom to the nearest bound and the largest equity holdings as contributors. A warning is recorded as a warning, never as a breach. A breach opens a case, and closing it can require a stated number of compliant observations.