Net exposure

Net exposure shows a portfolio’s directional position. A fund with 1,200 of longs and 200 of shorts has net exposure of 1,000, or 100% of a 1,000 net asset value. A market-neutral fund aims for net exposure near zero, while its gross exposure may be several times its capital.

Limits are often set as a band, such as “net equity exposure between 0% and 50%”, alongside a gross cap. Net figures depend on what may be offset. Under the commitment method in Article 8 of Regulation (EU) 231/2013, netting and hedging reduce exposure only when stated conditions are met.

In Acclimetry’s gross and net exposure limits, net exposure is the signed sum over net asset value. A rule can require every position to state its direction. A holding without one is then a data gap, not an assumed long (gross versus net exposure).