Policy clause
"No more than 5% in any single issuer": how to write it, test it and evidence it
A single-issuer limit caps the share of the portfolio exposed to one issuer, adding every bond, share and deposit it stands behind. It becomes testable once the policy names the denominator, says whether related companies count together and lists any carve-outs. Acclimetry measures it with the concentration template, one result per issuer.
No more than 5% of the portfolio may be invested in the securities of any single issuer.
Questions to settle before it can be tested
- Denominator: 5% of the whole portfolio, one manager's mandate or the bond sleeve? Acclimetry divides by the net market value of the positions the rule measures.
- Issuer or group: does a parent's bond count with a subsidiary's shares? If so, measure by issuer group, which adds everything under one ultimate parent.
- Carve-outs: government bonds, funds and cash are often exempt. Leaving them out of the measured population also removes them from the denominator.
- Timing: at purchase, or at all times? Each run reads current holdings, so a market move past 5% is a breach from the first observation.
As a testable rule
Concentration template, dimension issuer: each issuer's market value over the net market value of the measured positions. Hard maximum 5%, warning maximum 4.5%, tolerance zero, so exactly 5% is compliant. A holding with no issuer leaves every issuer row not evaluated; a grace period would delay the case's clocks, not the breach.
A testable wording
No more than 5% of the portfolio's market value may be exposed to any single issuer, counting all its securities and deposits. UK government bonds and authorised funds are excluded. The limit applies at all times.
Excluded holdings leave the denominator too, so the rule errs on the strict side; record that as an author decision. A cap covering every holding also implies at least 20 issuers; see the issuer concentration limit.
Worked example
Acme's bond and shares are one issuer at 6% of the 4m book; with no carve-out, the gilt and fund lines exceed 5% too.
Rule template:concentration dimension: issuer
Bounds: warn max 4.5% · hard max 5%
| Holding | Issuer | Class | Market value |
|---|---|---|---|
| Acme plc 4.25% 2029 | Acme plc | Corporate bonds | 140,000 |
| Acme plc ordinary shares | Acme plc | Equities | 100,000 |
| UK Treasury 4.25% 2032 | HM Treasury | Government bonds | 1,000,000 |
| Global equity index fund | Global equity index fund | Funds | 1,300,000 |
| Northwind Energy plc ordinary shares | Northwind Energy plc | Equities | 600,000 |
| Harbour Bank 3.5% 2027 | Harbour Bank plc | Corporate bonds | 400,000 |
| Kestrel Utilities 5% 2031 | Kestrel Utilities plc | Corporate bonds | 300,000 |
| Cash at custodian | Custodian bank | Cash | 160,000 |
| Group | Status | Value | Bounds | Headroom to the hard bound | Code |
|---|---|---|---|---|---|
| Acme plc | Breach | 6% | ≤ 5% warning ≤ 4.5% | -1% -1.5% to warning | ABOVE_HARD_MAXIMUM |
| HM Treasury | Breach | 25% | ≤ 5% warning ≤ 4.5% | -20% -20.5% to warning | ABOVE_HARD_MAXIMUM |
| Global equity index fund | Breach | 32.5% | ≤ 5% warning ≤ 4.5% | -27.5% -28% to warning | ABOVE_HARD_MAXIMUM |
| Northwind Energy plc | Breach | 15% | ≤ 5% warning ≤ 4.5% | -10% -10.5% to warning | ABOVE_HARD_MAXIMUM |
| Harbour Bank plc | Breach | 10% | ≤ 5% warning ≤ 4.5% | -5% -5.5% to warning | ABOVE_HARD_MAXIMUM |
| Kestrel Utilities plc | Breach | 7.5% | ≤ 5% warning ≤ 4.5% | -2.5% -3% to warning | ABOVE_HARD_MAXIMUM |
| Custodian bank | Compliant | 4% | ≤ 5% warning ≤ 4.5% | 1% 0.5% to warning | WITHIN_LIMITS |
ABOVE_HARD_MAXIMUM: The measured value exceeds the approved hard maximum, beyond any stated tolerance.WITHIN_LIMITS: The measured value sits inside every approved bound.
Largest contributors: Acme plc → Acme plc 4.25% 2029 3.5%, Acme plc ordinary shares 2.5% · HM Treasury → UK Treasury 4.25% 2032 25% · Global equity index fund → Global equity index fund 32.5%
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, per issuer, the state, reason code, weight, headroom to both bounds and the issuer's lines as contributors. A breach opens or updates a case with first and last seen, peak value, owner and service-level clocks. Results and cases feed the evidence pack, and past runs can be reproduced.