Methodology note
Market value versus book cost
Market value is what a holding is worth today, and book cost is what was paid for it. Most monitoring tests limits on market value, so a holding that grows past its cap breaches without any purchase. Some documents test compliance at the time of purchase instead, and the rule must follow the wording.
allocation_range · Issuer concentration limit (single issuer, single instrument)concentration · Private markets commitment limit (unfunded commitments)commitment_limitWhat the registry measures
The registry's percentage templates weigh positions by market value, or by a stated exposure such as notional or commitment. None reads book cost.
So an allocation band bought at 55% equities reads 64% once equities outperform, and a 60% maximum is breached with no trade. The example shows that drift.
At purchase versus at all times
Some documents test compliance when an investment is made, not continuously. The SURS standard manager agreement, for example, has the manager certify compliance at the time each investment was made.
US fund law has a similar idea. A diversified fund does not lose its status through later changes in value, only through an acquisition that causes the discrepancy.
Writing it into a rule
A continuous market-value rule is the usual reading, and the one monitoring can test directly. A time-of-purchase rule is best tested before the trade, with the later readings kept as information.
If a policy really means cost, record that as an author decision. Keep a separate check for it, such as a manual obligation, and never feed book cost into the market value field.
Pitfall: drift is a passive breach
A cap breached by price drift is a passive breach. Many rule sets allow time to correct it, but it is still a breach and needs a case; see active vs passive breach.
Worked example
At market value, equities of 640 in a 1,000 book are 64%, over the band's 60% maximum, whatever they cost.
Rule template:allocation_range dimension: classbands: group=Equities, hardMin=40, hardMax=60
| Holding | Class | Market value |
|---|---|---|
| Global equities | Equities | 640 |
| UK gilts | Bonds | 360 |
| Group | Status | Value | Bounds | Headroom to the hard bound | Code |
|---|---|---|---|---|---|
| Equities | Breach | 64% | 40% – 60% | -4% | ABOVE_HARD_MAXIMUM |
ABOVE_HARD_MAXIMUM: The measured value exceeds the approved hard maximum, beyond any stated tolerance.
Largest contributors: Equities → Global equities 64%
Computed at build time by the Acclimetry rule engine (backend commit 8197063); the same code runs in the product.
Questions
Should a policy ever test at cost?
Rarely. Market value reflects the risk held today, and cost reflects history; where a document says "at the time of purchase", test before the trade.
Does drift need correcting at once?
It depends on the rule set and the policy. Many allow time for passive breaches, so record the cause and the deadline either way.
Sources
- SURS Standard Form Investment Manager Agreement (Exhibit A investment guidelines, Exhibit E compliance certificate) · terms not verified · Read on12 October 2026
- 15 U.S.C. 80a-5, Investment Company Act of 1940 §5(b)(1) and §5(c) (Cornell LII) · public domain · Read on12 October 2026