Policy clause
"Hold between 2% and 10% in cash": how to write it, test it and evidence it
A cash range sets a floor for liquidity and a ceiling against cash drag. It becomes testable once the policy says which holdings are cash, whether cash inside funds counts and how pending trades are treated. Acclimetry measures it with the cash range template over the classes the rule names as cash.
The portfolio will hold between 2% and 10% in cash.
cash_rangeQuestions to settle before it can be tested
- What is cash: deposits only, or money-market funds and Treasury bills too? The rule counts the classes it names, nothing else.
- Cash inside funds: with look-through on, each fund's recorded cash entries join the weight; a fund with no usable composition is disclosed.
- Pending trades: trade-date or settlement-date cash? A purchase awaiting settlement can show cash that is already spent.
- Overdrafts: a negative cash balance reduces the weight. If borrowing has its own limit, test it separately.
As a testable rule
Cash range template, cash class Cash only, look-through off; add Money market funds if the policy counts them. Hard minimum 2%, hard maximum 10%, warning bounds at 3% and 9%, over the net market value of the measured positions. A cash level exactly on a bound is compliant.
A testable wording
Bank deposits, excluding money-market funds, will be held between 2% and 10% of the portfolio's market value on a trade-date basis. Cash inside pooled funds is not counted.
The cash minimum and maximum page shows the look-through option; fund look-through covers compositions.
Worked example
Deposits of 48,000 are 1.6% of the 3m portfolio, under the floor; the money-market fund is not a named cash class.
Rule template:cash_range cashClassNames: Cash
Bounds: hard min 2% · warn min 3% · warn max 9% · hard max 10%
| Holding | Class | Market value |
|---|---|---|
| Global equity fund | Equities | 1,800,000 |
| Corporate bond fund | Bonds | 900,000 |
| Property fund | Property | 192,000 |
| Sterling money-market fund | Money market funds | 60,000 |
| Bank deposits | Cash | 48,000 |
| Group | Status | Value | Bounds | Headroom to the hard bound | Code |
|---|---|---|---|---|---|
| Cash | Breach | 1.6% | 2% – 10% warning 3% – 9% | -0.4% -1.4% to warning | BELOW_HARD_MINIMUM |
BELOW_HARD_MINIMUM: The measured value falls below the approved hard minimum, beyond any stated tolerance.
Largest contributors: Cash → Bank deposits 1.6%
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 cash weight, its state, reason code and headroom, with the cash lines as contributors. With look-through on, the result also says how many funds were expanded and which could not be. A breach opens a case whose root cause can record a cash flow, such as a large purchase.