Some examples of the different types of rules that can be set are:
- The portfolio must be diversified across at least 20 instruments, 10 sectors, 3 geographical zones, etc.
- No more than 5% of the current market value (or nominal amount) of the portfolio may be held in any one instrument, no more than 20% to obligators with a rating of BBB or lower, no more than 30% in structured products or exotic deals, etc.
- The top ten securities in a portfolio must account for no more than 15% of the value of the portfolio or 50% of the portfolio Profit & Loss.
- The maximum maturity for any instrument in the portfolio is 10 years.
- The maximum quarterly YTM change in the portfolio is 25 basis points.
- A portfolio must not include certain countries, industry sectors, ratings, issuers, instruments, currencies, etc.
- Certain portfolios must track benchmark indices – either standard indices are imported from the market or customizable indices are set up in the system. Compliance Rules can easily be activated / deactivated for each portfolio, or generic rules can be set up to determine which rules apply to which portfolios. Online reporting and monitoring tools show for each portfolio how the fund is performing against all of the relevant criteria set down.