Best Execution / Best Selection Policy

FundRock France AM (“FFAM”) as AIFM under the AIFM Directive 2011/61/EU shall obtain the best possible result when executing decisions to deal on behalf of its funds under management according to the objectives, investment policy and specific risks, as indicated in the respective prospectuses (Commission Regulation 231/2013 (AIFMD Level II articles 27 and 28)).

The Policy applies to financial instruments (“FI”) covered by the European Union Markets in Financial Instruments Directive. It means for the current remit of FFAM:

• Equities;
• Bonds;
• Money Market instruments;
• Collective investment schemes;
• Foreign Exchange (Spot);
• Derivatives (for FFAM – only FX and interest rates derivatives for hedging purposes).

Key Principles

When FFAM delegates the portfolio management function to appointed Investment Manager (‘IM’) delegates; therefore FFAM ensures that these Investment Managers to which portfolio management has been delegated, have defined implemented and monitor the implementation of a best execution/selection policy.

When FFAM acts as portfolio management function, due to the nature of the assets which are mainly illiquid and not traded on a regulated market, extensive negotiation of the terms and conditions, as well as a detailed due diligence analysis of a particular investment (e.g. real estate, infrastructure, private equity) takes place, before the AIF will enter into an investment. When the transaction is not a Financial instruments, FFAM act in the best interest of the AIF and its investors. Even though FFAM manages multiple portfolio simultaneously, it is highly unlikely that an order allocation or order aggregation is possible or feasible, given the significant differences in the nature of each of FFAM’ mandates. However, at all times FFAM will ensure – if applicable – that orders executed on behalf of its funds are fairly allocated to act in the best interest of investors.

Execution

Execution venues

FFAM shall ensure the best possible order execution for its Fund’s by selecting what it believes is the most suitable means of execution, taking into account the execution factors and criteria set out below:

• Orders for equities or listed funds would be generally executed via trading intermediaries on regulated markets, exchange-like trading systems or via systematic internalisers
• Orders for mutual funds would generally be executed at the published net asset value of the fund (“NAV”) plus eventually entry costs (distribution or premium)
• Non-exchange traded derivatives (“OTC derivatives) are generally part of a financing offer. In that case the financial offer including the OTC derivative part is considered as a all. In other cases, it would be traded on bilateral basis only with banking counterpart subject to a standard contractual agreements.
• Orders for bonds would be generally buy directly to the issuer. In other case order is placed on over-the-counter markets (“OTC Market”). Quoted prices on these markets are not generally made available by the counterparties as the OTC markets is characterised by proprietary trading transactions and as such the markets are decentralised, fragmented and opaque. Prices are negotiated on a bilateral basis with the counterparties. These counterparties often have proprietary holdings in these instruments, for which they quote prices. Unlike on the equity markets, the choice of counterparties for bonds is often limited. In many cases, as the products are only offered by a limited number of counterparties, there is not much transparency in terms of liquidity or price. In volatile non-transparent markets, it may be necessary to accept the first price offered without the opportunity to obtain or request other prices. Moreover, there may be bonds offered exclusively through one counterparty, or for which settlement of an order of a certain size can only be guaranteed by one counterparty, in which cases it is not possible to obtain a comparative offer.
• Wherever orders are executed for equity, derivative or bonds via trading intermediaries, FFAM shall consider whether appropriate best execution framework at the intermediaries are in place.

Execution process

Transactions are executed through counterparties that are selected in line with objective criteria. Execution is undertaken on the basis of agreed processes and it is assessed in line with these criteria.

Due to the nature of the business of FFAM, there are no internal counterparties or brokers within FFAM.

Execution Factors and Criteria

In order to comply with the principles and the regulatory provisions, the following execution factors are assessed FFAM when seeking to achieve best execution:

• price
• transaction costs
• speed and type of execution
• likelihood of execution
• size of the order
• time of the order
• type of financial instrument
• any other consideration that is key to order execution.

Although the price is usually a key factor, the value of a particular transaction can be influenced by the other execution factors and therefore the relative importance of the factors listed above may vary depending on the following execution criteria:

• type of order
• type of financial instrument –      type of place of execution.

Responsibilities

The Management Committee of FFAM is defining the best execution framework, ensuring that it is cascaded down to the relevant oversight teams via proper training and instructions.

The Compliance Function ensures that any new rules concerning best execution are analysed and communicated to the teams in charge of delegates oversight. The Compliance Function also ensures monitoring of compliance with the regulatory requirements, i.e. the effectiveness of the control by the FFAM oversight teams on the implementation of the relevant policy requirements by appointed delegates.

FFAM team managers are responsible for defining procedures of oversight that fit legal requirements and compliance advice and for escalating any breach detected to the Management Committee and the respective Funds Boards of Directors.

The Policy is reviewed on an annual basis and more frequently as required to reflect business and market developments.