Fund of funds

A fund of funds holds units in other funds, which in turn hold the securities. Its manager chooses and weights the underlying funds. An investor’s exposure to any issuer or asset class therefore sits one or more levels down.

A policy can limit the funds themselves. Under Article 55 of the UCITS Directive, a UCITS may hold at most 10% of its assets in any single other fund. Member states may raise that limit to 20%, and funds other than UCITS may not exceed 30% in aggregate.

A limit can also be measured through the funds, on what they hold. Acclimetry’s look-through exposure limit expands fund positions through dated compositions you supply, up to five levels deep. A fund without a usable composition stays unexpanded, and the result says so (fund look-through).