Capital Allocation Worksheet

A capital-allocation worksheet converts a written investment or trading policy into proposed amounts, weights, risk contributions and implementation checks. It makes concentration and liquidity visible; it does not decide what allocation is suitable for a person or institution.

Portfolio allocation table

Bucket or strategy	Role	Current value	Current weight	Target weight	Allowed range	Liquidity	Risk driver	Action
[Name]	[Growth / income / hedge / liquidity]	[Amount]	[Formula]	[Policy]	[Min–max]	[Time to cash]	[Equity / rates / FX / credit / other]	[Hold / add / reduce / review]
[Name]	[Role]	[Amount]	[Formula]	[Policy]	[Min–max]	[Liquidity]	[Driver]	[Action]

Core calculations

Current weight: bucket value ÷ total portfolio value × 100.
Target amount: total allocable capital × target weight.
Allocation gap: target amount − current value.
Concentration: largest relevant exposure measured by asset, issuer, sector, currency or driver.
Liquidity coverage: liquid assets ÷ planned near-term cash need, under a clearly defined horizon.

Do not confuse capital weight with risk contribution

A small leveraged or volatile position can contribute more risk than a larger stable holding. Add a separate risk estimate appropriate to the portfolio and record the method. Portfolio Risk explains aggregation and dependence.

Policy and constraint section

Total allocable capital:
Base currency:
Purpose:
Time horizon:
Near-term cash requirement:
Minimum liquidity reserve:
Eligible assets or strategies:
Prohibited exposures:
Maximum concentration:
Currency treatment:
Rebalancing rule:
Approval authority:
Review date:

These values should come from an approved Investment Policy Statement or trading-capital policy. The worksheet should not invent them.

Exposure map

Exposure	Direct holdings	Indirect holdings	Net direction	Limit	Evidence
Equity market	[List]	[Funds/derivatives]	[Long/short/net]	[Policy]	[Source]
Interest-rate duration	[List]	[Embedded]	[Estimate]	[Policy]	[Method]
Currency	[List]	[Unhedged assets]	[Net]	[Policy]	[Rates]
Credit/liquidity	[List]	[Fund holdings]	[Level]	[Policy]	[Source]

Trading-capital extension

When the worksheet covers several trading strategies, add each strategy's capital assignment, maximum open risk, correlation group, margin need, drawdown trigger and pause condition. Capital allocated to a strategy is not the same as the amount that may be lost on one trade.

Implementation checks

Decision sequence

Define the capital base and governing policy.
Record current values on one date.
Map holdings to roles and risk drivers.
Calculate current weights and target gaps.
Check liquidity, concentration and aggregate exposure.
Estimate costs and implementation constraints.
Approve actions and preserve the pre-trade worksheet.
Review through the documented rebalancing process.

Limits

This worksheet is educational and cannot determine personal suitability, tax treatment or a regulated recommendation. Portfolio Construction owns how exposures are combined, while Portfolio Rebalancing owns ongoing restoration of policy weights. Return to MFXG tools for related records and calculators.