> For the complete documentation index, see [llms.txt](https://docs.mudigital.net/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.mudigital.net/mechanics/risk-management-framework.md).

# Risk Management Framework

We aim to deliver consistent, risk-adjusted returns by tracking and managing liquidity risk, credit risk, and price risk across the underlying Asset Pool

### Liquidity Risk

* Maintain minimum 80% allocation to liquid, freely tradable bonds (ie. capping illiquid private credit positions to 20% of the Asset Pool)
* Significant portion allocated to Investment Grade bonds that exhibit lower volatility
* Credit lines available with our prime broker to have access to fast liquidity while managing the selldown of the underlying bonds

### Credit Risk

* Target blended portfolio rating of BBB or higher
* Ongoing monitoring of credit events of all positions, with periodic assessment of the ratings drift of the overall portfolio
* Restrict Private Credit deals to co-investments with other reputable lenders to mitigate counterparty risk

### Price Risk

* Manage duration to average of 5, limiting adverse mark to market impacts of changes in rates
* Maintain maturity ladders and staggered bond durations to ensure regular cash flows without forced selling
* Active management strategy to take profit during times of portfolio outperformance