How much of the portfolio is exposed to the same issuer through different managers? This original fictional exercise focuses on distinguishing manager count from underlying exposure. The task is to build a look-through exposure table and manager-diligence question log, not copy a confident conclusion. It is not a live recommendation, client record or employer assessment.
The inputs and the question
Fund-of-funds diligence examines the managers and the underlying exposures, terms and limitations of the available data. This guide uses a look-through exercise rather than ranking real funds or recommending an allocation.
| Supplied item | Fictional input |
|---|---|
| Allocation to Fund A | 60% |
| Fund A exposure to issuer X | 10% |
| Allocation to Fund B | 40% |
| Fund B exposure to issuer X | 15% |
Use the supplied inputs together. When dates, units or definitions are not given, identify the gap rather than silently filling it with a convenient assumption. An actual assignment may require more detail than this deliberately limited case.
Work through the base case
Portfolio exposure to X is 60% × 10% + 40% × 15% = 6% + 6% = 12%, using the supplied same-date, net-asset conventions. Two managers do not imply two independent exposures.
Ask whether the holdings cover the same date and definition, whether derivatives or leverage are omitted, and how missing positions affect the conclusion. The 12% result is a supplied-example calculation, not a risk limit or an allocation recommendation.
The arithmetic or evidence check is only one part of the answer. Explain the definition that makes it valid and what remains outside the exercise. Do not convert a result from this case into a claim about a real company, market or client.
Change the assumption and follow the consequence
If Fund A’s X position doubles to 20% and the allocations stay constant, look-through X exposure becomes 12% + 6% = 18%. Separate a holdings change from an allocation change.
Keep the unchanged inputs visible. State whether the change is an observed fact or a scenario you introduced. If the information needed to calculate a fuller result is missing, say what you would request instead of manufacturing precision.
The interpretation to avoid
Counting funds instead of exposures, mixing stale holdings or assuming unknown positions are zero can create a false diversification conclusion.
A useful response names the limitation without abandoning the task. Show the part you can establish, then explain the condition or document needed for the next conclusion. Being explicit about that boundary is different from refusing to reason about the case.
Build the evidence artifact
Build a look-through table with dates, definition, coverage gaps and concentration questions. Keep manager selection and the investor’s mandate separate from the arithmetic.
Answer these questions before presenting it:
- Do the holdings dates and exposure definitions match?
- What leverage, derivatives or unreported holdings are missing?
- What liquidity and mandate constraints matter beyond issuer exposure?
For your own practice, write the supplied facts, your method, the base result, the changed assumption and one unresolved question on a single page. Label professional work, public-data projects and fictional exercises accurately. Remove confidential data and do not use the example to imply a decision you did not own.
What to use next
Use the fund-of-funds diligence preparation guide to connect the exercise to a readiness and next-resource decision. Compare the adjacent preparation task if your gap is different. The primary-source background supplies concept or role context; the facts and worked exercise above are original and fictional.
Application support does not certify a manager, fund or investment allocation. Inspect scope before choosing support. A readable and reproducible explanation is the immediate objective; this case does not promise an interview, qualification, investment result or a particular search ranking.