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I completely understand because I was reading about this yesterday while prepping for ICWIM. It breaches when the illiquid assets exceed fifteen percent of the net asset value or the maximum weighted maturity allowed.
The distinction lies in the classification because the fifteen percent threshold is strictly for highly illiquid assets whereas the aggregate measure is three-five percent and you really need to watch the modified duration to avoid penalties and I found the specific breakdown of these limits in the ICWIM module study materials to be quite clear.
The breach is triggered the moment the aggregate illiquid assets cross 35% or a single issuer breaches 8%. Do not bother with the suspension mechanics until you memorize those absolutes. I focused entirely on the threshold definitions at exams.academy and passed ICWIM without headaches. /certifications/cisi-icwim/
I am getting a blue screen of death in my head because Anxious_Account_4402 said the aggregate is 35% but Anxious-Lion-9574 said 15% and I cannot tell if the question logic has changed since the last version of the study guide I keep confusing the maturity bucket stats with the asset classification limits my eyes are twitching every time I try to calculate the modified duration versus weighted market value I am about to pack it all in and go back to configuring firewalls
The breach is triggered the moment the aggregate illiquid assets cross 35% or a single issuer breaches 8%, please ignore the 15% figure because that applies to Article 12(4) and is different from the UCITS V update raising the aggregate limit to 35%, you must know the exact trigger for suspension of dealing versus the general restriction, I found the breakdown of these limits in the ICWIM module study materials on exams.academy/certifications/cisi-icwim/ to be the only way to clarify this contradiction.
Think of it like managing a household budget; you cannot keep more than 8% of your disposable cash in one non-liquid asset like a rare painting, and if your total investment in illiquid assets fills your savings bucket beyond 35% of the total balance, the bank will freeze your card. The breach triggers instantly when that single debt exceeds 8% or when the sum of all illiquid assets crosses the 35% threshold, so memorize those two numbers to master ICWIM. /certifications/cisi-icwim/
While I agree that memorizing the absolute aggregate and single-issuer percentages is critical for ICWIM success, I want to explore the theoretical edge case involving the Weighted Average Maturity under stress conditions; if the fund holds a large block of high-convexity illiquid debt at par value, does the breach vis-à-vis the modified duration limit occur before the aggregate asset ceiling is breached, effectively rendering the percentage thresholds cyclical rather than absolute safety valves?
The limit is hit when that single debt issuer breaches 8 percent or the aggregate illiquid assets top 35 percent. Just memorize those thresholds for ICWIM.