Look-through exposure across SMAs and funds

One issuer can show up in a household three times: held directly at one custodian, held inside a separately managed account at another, and held again inside a fund that reports its top positions each quarter. Each statement is correct. None of them tells you the total.

Look-through exposure is the practice of opening those wrappers and adding the underlying holdings back together, so your team can see what a household actually owns across every account. This piece answers the questions we hear most often from operations and compliance teams, then walks through one example from start to finish.

The short version

• Look-through adds up the same issuer across direct holdings, SMAs, and funds that disclose their holdings.
• It is only as current as the oldest holdings report it uses, so every figure needs an as-of date.
• It measures exposure against limits your firm already set. It does not decide whether a position is too large.
• Where a vehicle does not disclose its holdings, the honest answer is "not looked through," not an estimate.

Questions operations teams ask

What does look-through mean in practice?

It means replacing a single line such as "Growth SMA, $22 million" with the positions inside that account, then combining those positions with everything else the household holds. If the SMA owns Microsoft and the household also owns Microsoft directly, the two amounts are added together under one issuer.

The same logic applies to pooled vehicles that publish their holdings. The fund's weight in an issuer is multiplied by the household's value in the fund, and the result is added to the issuer total with a note showing where it came from.

Why doesn't the custodian report show this already?

Each custodian reports what it holds. It has no view into accounts at other custodians, and it usually reports a fund as a single position. The combined picture only exists if someone assembles it, which is why concentration questions tend to land on the operations desk the week before a committee meeting.

Which vehicles can be looked through?

• Separately managed accounts: yes, because the positions sit in an account you can already see.
• Mutual funds and ETFs: usually, using the holdings the fund discloses, with the disclosure date attached.
• Private funds: sometimes, when the manager provides a schedule of investments.
• Direct private holdings: these are already the underlying exposure, so they count as entered, with their mark date.

Anything that cannot be opened stays as a single line and is labeled that way, so no one mistakes a partial view for a complete one.

How current is the number?

Direct and SMA positions are as current as the latest custodian file. Fund holdings are as current as the fund's last disclosure, which can be a month or a quarter old. A useful exposure report prints both dates, so a reader can see which part of the total moved yesterday and which part reflects the last quarter end.

Is a look-through report a recommendation?

No. It measures and reports. If a household is above a limit your firm wrote down, the report says so. What to do about it is a decision for your advisers and your client, and Stonebook does not make it.

Example: one issuer, three statements

Consider a household with a core account at Schwab, a growth SMA at Fidelity, and a position in a broad equity fund held at Pershing. Each statement lists Microsoft differently: shares in the core account, shares inside the SMA, and a percentage weight in the fund's latest holdings report.

1. Collect the direct position from the Schwab file, valued at the end-of-day price for the report date.
2. Open the SMA and pull the Microsoft shares from the Fidelity position file for the same date.
3. Apply the fund weight from its last disclosed holdings to the household's value in the fund, and record the disclosure date.
4. Add the three amounts under a single issuer line, with each source listed underneath.
5. Compare the total with the single-issuer limit in your firm's policy, and flag it only if it is over.

The result is one line that answers the committee's question directly, with the trail underneath that shows how the answer was reached.

The goal is not a bigger report. It is one number per issuer that your team can defend line by line.

What belongs in your policy file

• The single-issuer and sector limits your firm applies, and whether they are measured with look-through.
• Which vehicle types are looked through and which are reported as single lines.
• How old a fund holdings disclosure can be before it is flagged.
• Who reviews exposure flags, and how each review is recorded.

Writing these down matters more than the tool you use. An examiner will read the policy first and the report second, and the two should agree.

A checklist before your next committee meeting

1. Confirm every custodian file for the report date loaded, and note any that arrived late.
2. Check the disclosure date on each fund you are looking through.
3. List the vehicles you could not look through, with their values.
4. Run the issuer totals and compare them with your written limits.
5. For any flag, record who reviewed it and what they concluded.
6. Print the report with every as-of date visible on the page.

Mistakes that show up most often

• Mixing dates without saying so. Combining yesterday's SMA positions with a fund disclosure from three months ago is fine, as long as the report shows both dates.
• Double counting. When a household holds the same fund in two accounts, each account contributes only its own share. Applying the fund's full holdings to both accounts doubles the exposure.
• Dropping what cannot be opened. Leaving a closed vehicle off the report makes the totals look smaller than they are. Keep it on the page as a single labeled line.
• Treating a flag as advice. A limit flag is a measurement against your own policy. The decision still belongs to the adviser and the client.

Most of these come from assembling look-through by hand under time pressure. A consistent process, run the same way every quarter, removes nearly all of them.

Where look-through stops

Look-through cannot see inside a vehicle that does not disclose, and it cannot make an old disclosure current. It also should not blend estimates into reported numbers to make the picture feel complete. When data is missing, the report should say so plainly.

Within those limits, it is the clearest way to answer a question clients ask more often than you might expect: how much of this one company do we really own? The Exposure and Concentration page shows how Stonebook prints it, and you can book a call to see it against your own custodian files.