Look-through

Look-through replaces a fund position with its share of the fund’s underlying holdings. A fund worth 500 that is 60% equities adds 300 to the portfolio’s equity exposure. Treated as one position, the same fund would count only as 500 of “funds”.

Policies should say whether a limit applies directly or by look-through, and how old a fund’s composition may be. Without look-through, a cap such as “equities no more than 70%” can be met on paper but breached in substance. The term here concerns fund holdings; UK tax and bank capital rules use “look-through” for other things.

Acclimetry’s look-through exposure limit expands fund positions through supplied compositions, up to five levels deep. Example: 500 of direct equities plus 60% of a 500 fund is 800 of a 1,000 portfolio, a breach of a 70% cap. A fund with no usable composition cannot be expanded, so the result is not evaluated (fund look-through).