Investment Limit Management

IPConcept takes on the task of reviewing and monitoring compliance with and/or reductions in investment limits within the framework of applicable legal, regulatory and prospectus-based provisions based on the calculated net asset value. This includes::

  • Reviewing the eligibility of investments (whether or not they can be acquired)
  • Reviewing statutory concentration risks
  • Reviewing statutory restrictions on counterparty risks
  • Reviewing cover requirements for derivative financial instruments
  • Monitoring market price risks
  • Monitoring liquidity risks

Investment limits are reviewed at each stage of the process (pre-trade, post-trade, post-booking). They are reviewed according to the principle of identifying actual or foreseeable breaches of investment limits at the earliest opportunity. Pre-trade and post-trade checks are carried out after each order is placed. Similarly, a legal investment limit review is carried out the day after each fund price calculation (post-booking).

As part of the investment limit management process, IPConcept is responsible for technically designing the legal, individual and prospectus-based investment limits and programming them in the IP.System order management and compliance system.

Investment limit management generally includes the following additional tasks:

  • Coordinating with the depositary if investment limits are breached
  • Providing support with the submission of reports to the CSSF and auditors if investment limits are breached
  • Providing support with questions from auditors, for example as part of the annual financial statements and in the event of mergers, migrations and investment limit breaches
  • Providing support to the appointed Central Administration Agent in drafting long-form reports and making preparations for Board of Directors meetings
  • Reviewing the feasibility of investment policy in sales documentation when a new fund is launched or when changes are made to existing sales documentation
  • Reviewing sample portfolio when a new fund is launched or when changes are made to an existing fund
  • Monitoring when values exceed or fall below reporting thresholds where overriding mandatory reporting is required 

The methodology behind these investment limit checks is continuously reviewed and refined by the Investment Limit Management team. Similarly, regulatory requirements in this area are constantly being replaced by new or amended compliance rules.