To which type of assets does the exposure limit not apply?

The exposure limit in the context of Unit Investment Trust Funds (UITFs) generally refers to regulatory constraints on how much of a fund's portfolio can be allocated to certain asset classes, particularly those identified as high-risk. Non-risk assets are typically understood to be assets that do not exhibit significant fluctuation in value or possess a high degree of risk, such as government bonds or cash equivalents.

Since these assets are considered stable and lower in risk, the exposure limit does not apply to them. This allows fund managers to maintain a higher allocation to non-risk assets without being constrained by regulatory limits, thereby providing a buffer against market volatility and preserving capital.

In contrast, high-risk assets, physical assets, and liquid assets may have specific exposure limits due to their varying degrees of risk and liquidity profiles. Therefore, it is the nature of non-risk assets that allows them to be exempt from these limits, facilitating better management of portfolio risk for UITF operators.