Aequam Capital

Scope of the procedure

In accordance with the terms of Articles L. 533-18 of the French Monetary and Financial Code and 314-75 of the General Regulations of the “Autorité des marchés financiers”, Aequam Capital establishes and implements a policy of better selection of intermediaries to whom orders resulting from its investment decisions are transmitted (order executors, derivative counterparties, futures compensators) in order to comply with the obligation to obtain the best possible result for clients or managed funds.

In accordance with the terms of Article 314-75 of the RG AMF, this policy of better selection of intermediaries is reviewed annually and, in any event, "whenever there is a significant change affecting the provider's ability to continue to obtain the best possible result for its clients or the collective investment mentioned in Article 311-1 A that it manages".

Intermediaries selection

Business relationship and file constitution

Before working with an intermediary, Aequam Capital insures that the intermediary concerned has the authorization and capacity to provide the services necessary to meet the needs of the asset manager portfolio in the context of order execution. Aequam Capital also ensures that the intermediary concerned is bound by a best execution obligation towards the asset manager portfolio either because it is itself subject to a best execution obligation and agrees to categorize Aequam Capital as a professional client, or because it contractually undertakes to comply with the best execution obligation.

Selection criteria

Working with a new broker may result from a decision by a Manager, validated by the Executive Committee.

The rating criteria are:

  • Pricing policy
  • Quality of order execution,
  • Responsiveness and resolution delays in the event of an anomaly or malfunction,
  • Tools provided,
  • Quality of the execution policy implemented.

The criteria are scored from 0 to 5.

Before working with an intermediary, Aequam Capital insures that the intermediary concerned has the authorization and capacity to provide the services necessary to meet the needs of the asset manager portfolio in the context of order execution. Aequam Capital also ensures that the intermediary concerned is bound by a best execution obligation towards the asset manager portfolio either because it is itself subject to a best execution obligation and agrees to categorize Aequam Capital as a professional client, or because it contractually undertakes to comply with the best execution obligation.

Annual review of intermediaries

At least annually, management reviews all these rating sheets at an Executive Committee meeting and reconciles them with the volume of business granted to each intermediary.

This annual review is the subject of a report in which the intermediaries excluded and those whose business volume is maintained or modified are mentioned.

Aequam Capital

Preamble

The UCITS V Directive focused on the remuneration policies of the asset manager applicable to "categories of personnel whose professional activities have a substantial impact on the risk profile of the UCITS managed" in order to ensure sound risk management and to allow a control of risk-taking behavior of staff members.

In accordance with the UCITS V Directive, Aequam Capital has implemented a remuneration policy and practices (the "Remuneration Policy") in order to ensure a sound and effective risk management, which was decided, in an extensive manner, to make applicable to all its permanent employees in order to prevent, manage and avoid conflict of interest situations and incompatible or inconsiderate risks with regard to the interests of investors in the UCITS and/or AIF under management.

The Compensation Policy considers Aequam Capital's organizational and operational requirements, as well as the nature, scope and complexity of its activities.

A paper version of this document is available free of charge on request.

Guiding Principles

Aequam Capital relies on a number of guidelines to ensure that the level of total variable compensation allocated to all employees leads to an alignment of interests between the asset manager and investors in the UCITS and/or AIF under management.

These guiding principles are as follows:

  • the remuneration policy is compatible with sound and effective risk management and does not promote or encourage risk-taking that would be incompatible, inconsiderate or excessive in relation to the risk profiles of the UCITS and/or AIF under management, their regulations or the instruments of incorporation of such UCITS and/or AIF;
  • the remuneration policy is in line with the economic strategy, objectives, values and interests (i) of the asset manager, (ii) of the UCITS and/or AIF under management and (iii) of the investors invested in these UCITS and/or AIF, and includes measures to detect, prevent, manage and avoid any conflict of interest;
  • the remuneration policy and its guiding principles are adopted and reviewed annually by a remuneration committee. This committee is also responsible for the effective implementation of these guidelines, which it oversees;
  • the guaranteed variable remuneration only occurs on an exceptional basis when a new member of staff is hired, and only during the first year;
  • variable remuneration is only paid or vested if it is compatible with the financial situation of the asset manager;
  • employees are required not to use personal hedging strategies or compensation or liability insurance that could be inconsistent with the risk alignment embedded in their compensation agreements;
  • variable remuneration is not paid through instruments or methods that facilitate the circumvention of requirements established by the existing regulatory framework.

Implementation of the guiding principles of the remuneration policy

The application of the above guiding principles results in:

  • Identification of the scope of the employees concerned: in order to ensure consistency of treatment, the management of Aequam Capital has decided to subject its remuneration policy to all the staff of the asset manager;
  • The annual written evaluation of all Aequam Capital employees sets the qualitative objectives to be achieved, which are decisive for future compensation and promotion:
  • Identification of the types of remuneration paid by the asset manager, distinguishing between fixed and variable remuneration;
  • Definition of qualitative criteria for the allocation of variable remuneration: it should be specified that the variable remuneration of employees is not directly linked to the performance of the UCITS and/or AIF managed but only to the quality of their work over the long term and their involvement in cross-cutting tasks;
  • The determination of the terms and conditions for the payment of variable remuneration (in year N or deferred);
  • Definition of the identity of the persons responsible for the allocation of remuneration: Aequam Capital's Executive Committee is responsible for setting up remuneration decisions. It carries out an annual review of the various elements of the remuneration policy.
Aequam Capital

Scope

In accordance with the requirements of Article 321-40 of the RGAMF, Aequam Capital has established an efficient and transparent procedure for the reasonable and prompt handling of complaints from existing or potential clients of the asset manager.

A complaint is considered to be a written or oral statement recording the dissatisfaction of a professional or non-professional client with the asset manager.

A request for information, advice, clarification, service or provision is not a claim.

Complaints handling process

Any complaint may be sent to Aequam Capital, 1 rue de la Bourse 75002 Paris, France or by email: info@aequamcapital.com

The asset manager will acknowledge receipt of the complaint within a maximum of ten working days from receipt of the complaint, unless the response itself is provided to the client within that period. Unless special duly justified circumstances arise, it will provide a response to the client within two months following the receipt of the complaint.

In the event of persistent disagreement, the client may contact a mediator, including the AMF mediator. The AMF contact details are as follows:
Autorité des Marchés Financiers
Madame Marielle Cohen-Branche, AMF mediator
17, place de la Bourse 75082 Paris Cedex 02

The AMF mediation request form and the mediation charter are available on the websitehttp://www.amf-france.org

GDPR

In the context of processing claims received on the basis of the aforementioned regulations, Aequam Capital collects personal data such as the identity of the person making the complaint, his or her contact details and the purpose or context of the complaint, as it refers to personal data such as the economic situation of the person concerned. Failure in providing all or part of the necessary personal data may result for the plaintiff of being totally or partially deprived of the benefit of the regulatory provisions on the processing of complaints.

The controller of this process is Aequam Capital, represented by its Chairman, who may be reached with the contact details provided in this document.

Data are kept for at least five years in accordance with regulatory requirements. Persons making a complaint are informed that their rights of access, rectification, deletion, limitation of processing, objection and opposition may be exercised by written communication to the contact details given in this document, and of the existence of the right to make a complaint with a supervisory authority.

Aequam Capital

Approche extra-financières de l’OPCVM (ESG)

Le fonds promeut les caractéristiques environnementales et sociales. Les sociétés dans lesquelles les investissements sont réalisés doivent également appliquer des pratiques de bonne gouvernance au sens de l’article 8 du règlement SFDR.

Notre approche de l’ESG

En notre qualité d’investisseur, nous accordons une grande importance au rôle que peuvent jouer les entreprises que nous sélectionnons et tout particulièrement, nous analysons les risques réglementaires, financiers et sociaux auxquelles ces entreprises sont confrontées. Nous sommes convaincus qu’une mauvaise maîtrise des risques ESG d’une entreprise entraîne à terme des risques de dégradation de sa rentabilité financière et représente une menace réputationnelle significative qu’il convient de circonscrire. Nous avons aussi conscience que l’application de mesures d’exclusion sur des bases ESG peut représenter un coût financier à court-terme (sous-performance par rapport à l’indice de référence) mais constitue à long terme un gage durable devant permettre à la fois d’améliorer les caractéristiques extra-financières du portefeuille mais aussi de renforcer ses performances financières.

Les équipes d’Aequam Capital s’appuient sur des bases de données externes provenant de grandes institutions de rating et qui proposent des notations pour les entreprises européennes sur les différents aspects Environnementaux, Sociaux et de Gouvernance. Ces données disponibles reposent sur le travail de centaines de personnes entièrement dédiées à la collecte d’informations et à leur analyse qui leur permet ensuite de les agréger sous la forme d’une notation ESG dont les modalités varient d’une agence à l’autre mais qui sont aisément comparables en choisissant une formulation commune.

Sur cette base, nous observons une dispersion parfois très forte des classements et notes des entreprises analysées par les différentes agences. Cela traduit souvent des biais d’analyse de la part des agences de rating. Par exemple, certaines agences pénalisent certaines controverses comme le tabac ou l’armement et d’autres ne le font pas. La contextualisation contribue aussi à des divergences parfois significatives : par exemple, le secteur de référence d’une entreprise a des contours variables selon les agences. Aussi, le poids relatif accordé à l’Environnement, au Social et à la Gouvernance varie d’un secteur à l’autre avec des critères très variables d’une agence à l’autre. En conséquence, certaines notations deviennent très subjectives alors que l’on recherche, au contraire, des notes les plus objectives possibles. Pour répondre à cette difficulté et satisfaire un besoin d’authenticité, les équipes d’Aequam Capital développent une méthodologie propriétaire et innovante permettant de débruiter les notations et d’obtenir ainsi une classification plus cohérente et moins dépendante des différents biais de ces agences. C’est sur la base de cette méthodologie de classification propriétaire que nos principes d’exclusion s’appliquent.

Notre gestion repose sur une approche quantamentale de type « top-down » qui analyse l’environnement macro-économique et boursier afin de sélectionner les styles de gestion les mieux adaptés à la situation observées. Les portefeuilles de styles sont constitués sur des bases quantitatives très précises relatives aux métriques financières (rentabilité et profitabilité, qualité du bilan) et boursières (volatilité des titres, performance boursière des titres, beta des titres…).

Définition de l’univers d’investissement grâce à un filtre ESG

L’univers initial d’investissement du portefeuille est représenté par les 600 valeurs du Stoxx 600. Nous appliquons un premier filtre d’exclusion en rejetant les entreprises qui ne sont pas signataires du Global Compact des Nations Unies et dont le rating ESG est clairement inférieur à la moyenne. Les dix principes du Global Compact des Nations-Unies reposent sur le respect des droits de l’Homme, sur les normes internationales du travail, sur le respect de l’environnement et sur la lutte contre la corruption.

Ensuite, nous appliquons un second filtre ESG à partir de notre méthodologie propriétaire qui nous permet d’éliminer l’ensemble des valeurs qui ne répondent pas à nos critères d’exigence ESG (nous définissons une combinaison de notes ESG en-dessous de laquelle les entreprises sont automatiquement exclues). Nous conservons un seuil minimal de 300 titres dans lesquels nous pouvons finalement investir et l’exclusion des titres sur des bases ESG représente un minimum de 15% de l’univers d’investissement initial. Ensuite, nous analysons les métriques financières et boursières des entreprises afin de pouvoir sélectionner les meilleures selon le style désiré. Nous obtenons ainsi un ensemble de portefeuilles de style de gestion clairement définis. L’analyse quantamentale mentionnée plus haut nous permet enfin de choisir le ou les différents styles de gestion dans lesquels il nous semble opportun d’investir.

Construction du portefeuille

L’ESG est ainsi au cœur de la construction de notre portefeuille car il définit les contours de notre univers d’investissement, complété dans un second temps par l’analyse des métriques financières et boursières qui permettent d’établir la sélection finale des titres de notre portefeuille. Nous avons fait le choix de l’exclusion plutôt que de la sélection pour éviter le biais embarrassant d’intégrer des titres aux caractéristiques ESG contraires à nos exigences mais très bien notées sous l’angles des métriques financières ou boursières. Le principe d’exclusion, en dépit de certaines limites, a le grand mérite de ne pas transiger avec nos principes. Il n’existe pas de seconde chance possible pour les entreprises qui ne satisfont pas à nos exigences.

Objectifs financiers et extra-financiers

L’objectif mesurable que nous nous fixons est d’améliorer le plus possible la note ESG de notre portefeuille par rapport à notre univers initial d’investissement équipondéré (Stoxx 600 EW). En premier lieu, notre univers d’investissement après exclusion ESG et avant le filtre des métriques financières et boursières présente une amélioration significative par rapport à l’univers de départ. Toutefois, nous ne fixons pas un objectif d’amélioration précis pour le portefeuille final car l’amélioration observée peut être très dépendante du style finalement choisi (value, growth, momentum par exemple). Nous considérons que les différentes exclusions que nous mettons en place permettent d’atteindre une réelle pertinence extra-financière. Et nous pensons aussi que, après les exclusions ESG, le cœur de notre gestion repose sur l’obtention de résultats financiers en ligne avec notre ADN : une surperformance par rapport à l’indice de référence avec une moindre volatilité historique.

Aequam Capital

Policy Scope

In accordance with Articles 321-46 and following the General Regulations of the Autorité des marchés financiers (AMF), the purpose of this procedure is to define the measures implemented by Aequam Capital to prevent, manage and deal with situations of conflicts of interest arising in the course of its business:

  • between Aequam Capital and its clients, whether physical or legal persons; or
  • between one or more employees of Aequam Capital and the clients who are physical or legal persons of the asset manager portfolio; or
  • between two or more clients, physical or legal persons of Aequam Capital.

Any investor who acquires shares in a fund managed by Aequam Capital is considered to be a client of Aequam Capital.

This procedure is intended to apply to all Aequam Capital employees (employees, temporary staff, interns and, in general, any person made available and placed under the authority of the asset manager).

Conflicts of interest identification

In the context of Aequam Capital's activities, several situations are likely to create conflicts of interest to harm the client's interests and are defined in Article 321-47 of the General Regulations of the Autorité des marchés financiers (AMF).

There are three types of potential conflicts of interest:

  • conflicts of interest involving several investment vehicles managed or advised by Aequam Capital;
  • conflicts of interest involving Aequam Capital and investment vehicles managed or advised;
  • conflicts of interest involving Aequam Capital employees.

Conflicts of interest may include:

  • financial management: fairness of holders, transaction between portfolios;
  • direct, indirect compensation paid or received: transparency of information to shareholders, choice of intermediaries, benefits, etc.
  • the organization of Aequam Capital: separation of functions, compensation of employees;
  • transactions on behalf of Aequam Capital, its managers and employees;
  • the primacy of the client's interest.

Aequam Capital takes all necessary measures to identify the sources of potential conflicts of interest.

Conflicts of interest prevention

Aequam Capital is an entrepreneurial and independent asset manager whose activity is the management on behalf of third parties. The activity of own-account management is limited to the financial investments of the asset manager.

The prevention of conflicts of interest within Aequam Capital is based on organizational measures as well as on procedures and controls.

Organizational measures

Separation of functions

In order to guarantee the interests of its clients, all decisions are taken independently and Aequam Capital and its employees ensure equal treatment between them.

Aequam Capital has set up an organization that separates "risky" functions with regard to conflicts of interest. Thus, the management, middle office, valuation (outsourced), risk control and marketing teams are clearly separated.

The compliance and internal control function is completely independent through its outsourcing and carries out permanent monitoring of the activities in order to ensure that internal control procedures are appropriate.

Circulation, exchange and protection of information

The computer system set up with independent networks between the teams, with limited access according to the employees, makes possible to limit authorizations only to the persons concerned by some. Barriers to the circulation of information intended to prevent the circulation of confidential or privileged information are thus put in place in order to separate activities likely to generate conflicts of interest (activities which are sources of non-public information or of conflicts of interest between them). In addition, specific operational procedures make possible to manage the circulation of confidential or privileged information and to remind employees on insider or confidentiality lists of their obligations of discretion and abstention with regard to these information (see collection of procedures, market abuse procedures and personal transactions).

Procedures and controls

The measures and controls adopted are designed to prevent and manage conflicts of interest and include the following provisions.

An internal conflict of interest management policy including instructions that employees must comply with in order to identify, prevent and manage conflicts of interest

The AFG's internal and external ethics rules, completed with numerous targeted application procedures, control the risk that Aequam Capital staff take advantage of information held to the detriment of clients or act with interests that could be opposed to those of clients (procedure for making employees aware of the rules of ethics, personal transactions procedures, gift policy, market abuse procedure, etc.).

Strict procedures and rules to govern order processing and the primacy of the client's interest

Aequam Capital strictly respects the operating rules of the financial markets and refrains from any infringement of equal treatment of orders.

In particular, orders transmitted in the market are pre-allocated and time-stamped, and Aequam Capital does not accept subscription-repurchase orders transmitted by clients after the centralisation deadline.

Strict procedures and rules in the better selection policy

The asset manager requires that all intermediaries involved in the execution of orders have been selected on the principle of the primacy of the client's interest as set out in Article 321-100 of the General Regulations of the Autorité des marchés financiers (AMF) and of the best selection, and have been approved by the managers. The criteria used to draw up this list are specified in the better selection policy.

Conflicts of interest management

Handling situations of potential or actual conflicts of interest

Any Aequam Capital employee who notices a potential or actual conflict of interest situation must immediately inform the RCCI. The RCCI will then have to analyze the situation and indicate to the employee concerned the behavior to be adopted.

Maintenance of the conflict of interest register

In accordance with the provisions of Article 321-50 of the General Regulations of the Autorité des marchés financiers (AMF), Aequam Capital sets up a register recording the activities carried out by or on behalf of the portfolio management company for which a conflict of interest involving a material risk of prejudice to the interests of one or more of its clients has occurred or is likely to occur.

The register shall identify all potential or actual conflicts of interest and the measures to deal with such conflicts of interest that have been put in place.

Clients information

When a situation of potential conflict of interest is identified and the measures put in place by the asset manager are not sufficient to ensure, with reasonable certainty, that the risk of harming the interests of clients will be avoided, the asset manager's directors shall be informed as soon as possible so that they can take any measures necessary to ensure that the asset manager’s portfolio will in all cases act in the best interests of the UCITS or the AIF and its unit-holders.

Similarly, if Management considers, on the advice of the RCCI, that a conflict of interest has not been resolved, the affected unitholders or clients will be informed on a physical device by Aequam Capital.