Portfolio Look-Through
Portfolio look-through is measuring true underlying exposures by analyzing what’s inside funds, vehicles, and layered holdings.
Allocator relevance: Look-through prevents “hidden concentration”—allocators need it to manage risk budgets, sector exposure, and liquidity mismatch.
Expanded Definition
A portfolio can appear diversified at the surface while hiding concentrated exposures underneath (same sectors, same sponsors, same geographies, same factor bets). Look-through reconciles layered structures—funds of funds, feeders, SPVs, holding companies—into a single exposure view.
In allocator workflows, look-through matters for governance: concentration limits, compliance constraints, and internal reporting. In diligence, it matters for understanding overlap between managers and whether a portfolio is unintentionally doubling down.
Decision Authority & Governance
Governance defines look-through standards: how deep you go, how you classify exposures, and how you treat unknowns. Decision authority includes who can approve exceptions to concentration policies when look-through reveals overlap.
Common Misconceptions
- Look-through is only needed for hedge funds or liquid portfolios.
- If you have diversification at the fund level, you’re diversified overall.
- Look-through is “perfect” (it’s often partial and probabilistic).
Key Takeaways
- Look-through is essential for real exposure control.
- Overlap risk is common in private markets.
- Governance should define how unknown exposures are treated.