What are the diversification requirements for a triple-A rated fund?
Funds registered as UCITS must operate within the diversification requirements set out in UCITS legislation (Directive 85/611/EEC). This limits exposure to a single issuer to a maximum of 5% of fund assets (relaxed to 10% of assets in some jurisdictions, although this relaxation is subject to an overriding requirement that no more than 40% of the whole portfolio may be made up of individual holdings in excess of 5%). As part of the rating process, rating agencies regularly review the diversification of fund portfolios and will raise concerns with investment advisers should this become necessary.
