Montpensier Finance has established and maintains an effective conflicts of interest policy, under the European Directive on Markets in Financial Instruments (MiFID) which came into force on November 1st, 2007.
This policy aims to identify situations that constitute or may give rise to a conflict of interest entailing a risk of damage to the interests of one or more clients, and to define the procedures and measures to manage these conflicts within the framework of the following activities and services:
- Management activities:
- Management of UCITS as defined by UCITS Directive;
- Management of AIFs as defined by AIFM Directive;
- Portfolio management for third parties as defined by MiFID;
- Other activities or services (marketing of UCITS / AIFs managed by another manager, investment advice, discretionary management mandates for unit-linked insurance products).
Montpensier Finance is an independent organization controlled by its management. There is no conflict of interest that may result from group affiliation.
Process for the identification and detection of potential conflicts of interest:
Montpensier Finance undertakes all reasonable measures to enable the detection of potential conflicts of interests which may exist between either the company, the parties concerned and all other parties directly or indirectly liked to the company through a controlling relationship on the one hand, and its clients or UCIs on the other hand, or between two UCIs or two of the company’s clients.
In order to detect the types of conflicts of interests which may infringe upon the interests of a client, Montpensier Finance takes into account, as minimum criteria, although not limited to this criteria, the case of the investment management company or the person concerned by the conflict of interests:
- is likely to make a financial gain or avoid a financial loss, at the expense of the client;
- has an interest in the outcome of a service provided to a client or of a transaction carried out on behalf of the client, which is distinct from the client's interest in that outcome;
- has a financial or other incentive to favour the interest of another client or group of clients over the interest of the client to whom the service is being provided;
- carries on the same business as the client;
- receives or will receive from a person other than the client an inducement in relation to a service provided to the client in any form whatsoever, other than the commissions or fees usually charged for such service.
Montpensier Finance has to identify all entities and persons that may be involved in a situation of potential conflict of interest, as well as identify areas of potential conflicts of interest.
Montpensier Finance conducted a mapping of potential conflicts of interest situations, which lists the situations likely to generate conflicts of interest in view of its size, its organization, the nature, importance and complexity of its business, and defines the outline of the procedures implemented by the company to prevent, supervise, and manage these conflicts of interest.
Risk mapping of conflicts of interest addresses the following themes:
- The characteristics of Montpensier Finance's structure and activities, which reduce the risk of potential conflicts of interest;
- The independence of third-party management in relation to proprietary management;
- The management of conflicts of interest risks in relation to the selection of service providers;
- Provisions to ensure management autonomy: organizational independence of the asset managers, independent choice of financial instruments, independent exercise of voting rights;
- Provisions on benefits and remuneration of staff and management company;
- Supervision of staff proprietary transactions;
- Privileged information processing;
- Compulsory pre-allocation of orders and rules for the treatment of partially executed orders;
- The prohibition of transactions between portfolios, etc.
Risk mapping of conflicts of interest is updated as often as necessary. Furthermore, a risk assessment of conflicts of interest is routinely undertaken during the creation and modification of products, activities and services.
Moreover, Montpensier Finance regularly updates a register of activities or services for which a conflict of interest entailing a risk of damage to the interests of one or more clients has arisen or is likely to arise.
Process to prevent potential conflicts of interest:
Montpensier Finance has always attached great importance and respect to the rules of ethics. Its staff is subject to regular training on the matter.
Montpensier Finance is committed to operate with discretion, loyalty, diligence and fairness, respecting the primacy of its clients' interests in relation to its own interests or those of its staff. Particular attention will be paid to the prevention of conflicts of interest and, where applicable, their equitable resolution for the benefit of clients.
Montpensier Finance will seek to maintain equal treatment between clients, and between managed portfolios and unitholders of mutual fund shares.
Confidentiality lies at the heart of Montpensier Finance's activity. The company pledges to set up and maintain an organization to prioritize the interests of its clients, including the implementation of Chinese walls where necessary.
Montpensier Finance also pledges not to use privileged information for either proprietary or third-party accounts.
Any asset manager's objective should be the defense of his clients' interests, while respecting management and risk control policies established by Montpensier Finance and, regarding portfolio management mandates, the type of mandate chosen by the client.
In order to ensure the integrity of Chinese walls, confidential information must not be shared with other Montpensier Finance staff members without valid business justification.
In any event, staff members must refrain from using privileged information they may have had knowledge of.
Staff members holding privileged information about a company must refrain from intervening in the securities concerned. Staff members must, as a rule, refrain from any market behaviour that could be construed as insider trading.
Montpensier Finance's Code of Ethics also incorporates the principles relating to the prevention and management of conflicts of interest.
Procedures and measures to manage conflicts:
Montpensier Finance sets up a procedure for every case, in order to eliminate or control potential conflicts of interest.
These procedures are designed so that relevant persons engaged in the various activities involving a potential conflict of interest carry out these activities with an appropriate degree of independence regarding the size and activities of Montpensier Finance, and the magnitude of damage risks to clients. As a result, these procedures include the various measures used to prevent conflicts of interest.
Montpensier Finance has thus implemented procedures that ensure the autonomy of asset management and the independence of proprietary and third-party management, and supervise the selection of its service providers as well as personal transactions, order allocation and control of privileged information.
In the case of an unidentified conflict of interest, Montpensier Finance takes all appropriate measures to protect client interests. In this respect, staff members who detect a possible conflict of interest must immediately inform the RCCI, who decides whether the situation should be recorded as a potential conflict of interest in the risk-mapping database, if it isn't already, and whether new controls should be set up.
The conflicts of interest policy is available on Montpensier Finance website.
Moreover, should a conflict of interest deemed potentially harmful to a client arise, Montpensier shall inform said client in a durable medium without delay. Notification would then clearly indicate:
- that organisational and administrative procedures undertaken by Montpensier Finance to prevent or manage the conflict are insufficient to guarantee, with reasonable certitude, that the risk of an infringement upon the interests of the client will be avoided;
- a detailed description of the conflict of interests occurring in the context of the provision of investment services or auxiliary services, taking into account the type of client to whom the notification is addressed;
- the general nature and sources of the conflict of interests, as well as the risks incurred by the client resulting from the conflicts of interests and the measures implemented to mitigate these risks, in sufficient detail to enable the client to take an informed decision regarding the investment or auxiliary service in the context of the arising conflict of interests.
In accordance with the current regulations and the transposition of the MIFID 2004/39/EC Directive, dated April 21st 2004 concerning Markets in Financial Instruments, Montpensier Finance has put in place a policy for selecting market intermediaries, in compliance with its obligation to act in the best interest of clients and the UCITS that it manages.
Montpensier Finance has delegated order management for its managed portfolios to Amundi Intermédiation, considering that this intermediary takes all reasonable measures to ensure the best achievable results.
Amundi Intermédiation is authorised by the CECEI as an investment service provider to receive and transmit orders on behalf of third parties for most financial instruments referred to in article L. 211-1 of the Code Monétaire et Financier.
Executing-broker selection is agreed jointly between Amundi Intermédiation and Montpensier Finance, through the application of Amundi Intermédiation's selection policy.
Furthermore, Montpensier Finance has implemented a best selection procedure for counterparties and intermediaries based on its requirements in terms of « investment decision-making support ».
In executing orders for Montpensier Finance, Amundi Intermédiation's own execution policy, agreed with its market counterparties, provides access to all traded markets which enable the best execution of orders.
Orders are routed either to regulated markets, or to multilateral trading facilities (MTF), or to internal market-makers as a function of the best execution conditions available on these markets.
In general, it is specified that orders, regardless of the transmission channel used, may be executed outside of regulated markets or multilateral trading facilities. As a function of the order execution policy effectively adopted by each intermediary, in compliance with best execution obligations, orders may be executed on regulated markets, or on agreed markets, on multilateral trading platforms or by using internal market-makers.
The present selection policy covers UCITS managed by Montpensier Finance and Montpensier Finance's professional and non-professional clients.
For non-professional clients, total cost is the determining criterion. This includes the traded price of the financial instrument plus execution costs, including:
- all expenses incurred by the client arising directly from order execution, including direct execution costs, clearing and settlement costs,
- any other fees paid to third parties participating in order execution.
In this context, Montpensier Finance uses order-routing systems and custodian services.
UCITS subscription and redemption orders
Furthermore, for UCITS subscription and redemption orders transmitted on behalf of managed portfolios, the notion of « best achievable result » is limited by the fact the subscription and redemption of UCITS units is carried out according to the conditions referred to in the prospectus of each UCITS.
Best selection policy monitoring
Montpensier Finance regularly checks the efficiency of its policy via controls covering the quality of execution by selected market intermediaries and, where necessary, corrects any shortfalls observed.
Montpensier Finance carries out a review of its market intermediary best selection policy on an annual basis, and also in the event of any significant changes impinging on its ability to continue achieving the best results for its clients. Clients will be informed, through the appropriate channels, of any major changes to selection policy.
In accordance with article L.533-22-1 of the Code Monétaire et Financier the following information concerns the respect of social, environmental and governance (ESG) criteria.
Information concerning criteria relating to the respect of social, environmental and governance (ESG) objectives has been published on the investment management company website since July 1st 2012 and in the annual reports relating to financial years since the year starting on January 1st 2012.
Montpensier Finance is a signatory to the United-Nations Principles for Responsible Investment initiative (PRI).
As a result, several measures have been put in place by Montpensier Finance in order to adapt its investment management processes and implement procedures and an organisational structure aiming to respect the Principles for Responsible Investment, by taking into account environmental, social and governance factors.
Montpensier Finance SRI approach is described on the Responsible Commitment page of Montpensier Finance website.
The TCFD report, within the framework of article 173 of the french energy and ecology transition law applicable to the funds, is available on the dedicated page of each fund.
In addition, as part of implementation of its ESG approach, Montpensier Finance has set up an exclusion policy which is established on several levels, depending on the scope of application of the exclusions, for different management process.
This document presents the conditions under which Montpensier Finance exercises voting rights attached to securities held in the UCITS/AIF it manages.
Montpensier Finance considers that the exercise of voting rights is an integral part of the investment management process and should be carried out in the best interest of its clients.
Montpensier Finance voting rights policy aims to promote the long-term valuation of its UCITS/AIF investments, by encouraging the best governance practices and promoting professional ethics.
1. Exercise of voting rights - organisation
The fund managers analyse unit/shareholder resolutions and decide how to vote. They refer to the principles regarding corporate governance recommendations published by ISS Governance.
Montpensier Finance has subscribed to ISS Proxy Research Services, which provides research and voting recommendations, based on independent objective in-depth analysis of unit/shareholder resolutions. ISS Governance publications form part of the prevention of conflict of interest risk policy implemented by ISS Governance.
The ISS covers all companies held in the portfolios of the funds managed by Montpensier Finance.
Operational procedures are ensured by the Operations Department in coordination with the UCITS/AIF custodian and ISS Governance.
The Operations Department monitors votes at General Meetings via the ProxyExchange system provided by ISS Governance, an electronic voting platform summarizing the resolutions for the General Meetings of companies in which the UCITS/AIF hold positions. These positions are automatically fed by the custodian, CACEIS.
2. Cases in which voting rights are exercised or not
Portfolio managers exercise the voting rights held by the UCITS/AIF which they manage according to several complementary criteria, provided that they have received the necessary information in order to participate in the vote.
As part of the implementation of the responsible investment principles, Montpensier requires fund managers to vote at General Meetings as often as possible provided that they have sufficient information at their disposal to participate, subject to technical impossibilities preventing them from participating in the vote.
- Securities lending
Montpensier Finance UCITS/AIF portfolio managers do not undertake securities lending.
In the event of any securities lending being undertaken, best efforts will be settled to recall the securities in order to exercise the voting rights, on condition that the stock loan agreement provides for this, and that the recall of securities does not incur any costs for the UCITS/AIF, which would be against the interest of unit/shareholders.
3. Voting policy principles
Compliance regulations require portfolio managers to carry out their functions independently, particularly with regard to issuers, and in the sole interest of unit/shareholders.
If necessary, portfolio managers may seek advice from the Head of compliance and internal control, who would refer to ISS Proxy Research Services if necessary.
Portfolio managers pay particularly attention to resolutions which may prejudice the interests of unit/shareholders.
- Decisions modifying corporate articles
Portfolio managers shall vote against any modifications to corporate articles which they believe would prejudice unit/shareholders.
- Approval of accounts and appropriation of income
Portfolio managers shall vote against the approval of accounts which the statutory auditor refuses to certify.
Portfolio managers shall vote against the appropriation of income which they deem to be against the interest of unit/shareholders.
- Nomination and revocation of administrative, management and supervisory bodies
Portfolio managers shall vote for the nomination of impartial independent administrators, which they deem to be in the interest of unit/shareholders.
- ESG information disclosure
Fund managers shall vote for propositions and unit/shareholder resolutions promoting ESG information disclosure.
- Related-party agreements
Portfolio managers shall vote against the approval of related-party agreements which they believe would prejudice unit/shareholders.
Capital share issues and repurchase programmes
Portfolio managers shall vote in favour of securities issues and repurchase programmes which they deem to be in the interest of unit/shareholders.
- Appointment of a statutory auditor
Portfolio managers shall vote against the appointment of a statutory auditor which they deem to be against the interest of unit/shareholders.
4. Conflicts of interest
Portfolio managers shall vote in the interests of unit/shareholders.
If portfolio managers detect a potential conflict of interests, they must consult the Head of compliance and internal control prior to voting, in order to guarantee the primacy of the interests of UCITS/AIF unit/shareholders.
5. Exercise of voting rights
Portfolio managers shall exercise the voting rights attached to shares, held in the UCITS/AIF portfolios that they manage, preferably by correspondence. If they attend the General Meetings, they will care to report their exact voting to the Operations Department. In this case, portfolio managers first ask the Operations Department to obtain the necessary admission cards.
In exceptional circumstances, portfolio managers can opt to vote by proxy or grant proxy to the president, they will beforehand justify their decision and refer to the Head of compliance and internal control.
Information relating to exercise of voting rights is available to Montpensier Finance UCITS/AIF unit holders or shareholders. If Montpensier Finance did not respond, after a period of one month, to a request for information regarding a vote on a resolution, silence has to be interpreted as indicating that Montpensier Finance voted in accordance with the principles posed in this "voting policy" document and the proposals of the Executive Board or the Board of Directors of the Company.
As part of the application of the Principles for Responsible Investment.
Montpensier Finance sets up an organization and processes aiming to respect the United Nations’ Principles for Responsible Investment.
The United Nations’ Principles for Responsible Investment make up an international framework that serves as a reference and is recognized by financial institutions.
As a signatory to these principles, Montpensier Finance publicly commits, as an investor, to adopt and apply them whenever in line with its managerial responsibilities. Montpensier Finance also commits to evaluate and improve the Principles’ contents and efficiency over time. We are convinced that it will help us meet our commitments to beneficiaries, and better align our investment activities with the public interest.
As part of this framework, Montpensier Finance set up an Engagement Policy that applies to active investment management equity and convertible bonds:
Montpensier Finance considers the exercise of voting rights an integral part of its investment management, which must be applied in the best interest of the unit-holders
The Montpensier Finance voting policy aims to promote long term valuation for mutual fund investments by incentivizing the spreading of the best governance and professional deontology practices.
Montpensier Finance completes its voting policy with an Engagement Policy.
The set of companies which the fund managers are meant to focus their engagement on are either poorly ESG-rated, or deemed susceptible of being exposed to ESG-related controversies.
The fund managers, assisted by the SRI analyst shall encourage these companies to improve their practices on environmental, social, and corporate governance issues, all of which are factors of sustainable growth.
The fund management teams are encouraged to raise any concern with companies during meetings, especially when the ESG issues seem insufficiently accounted for. The fund managers will establish a positive and constructive mid-to-long-term rapport with companies held in the portfolio.
This rapport is multi-faceted:
- Company contacts;
- Communication of the fund managers’ voting intentions to the company prior to the General Meeting.
The dialogue is conducted with the aim of:
- Encouraging companies to set up an ESG commitment;
- Encouraging companies to communicate about their ESG practices.
In addition to direct engagement initiatives we usually conduct directly with Small and Medium Companies, Montpensier Finance also participate in pooled engagement actions implemented by ISS as part of its ISS Ethix program especially for larger companies.
The Montpensier Finance engagement is based on:
- MSCI ESG-research, which determines ESG rating for securities;
- Fund management teams analysis;
- ISS Governance directives regarding corporate governance as part of the application of the Montpensier Finance Voting Policy;
- Collective engagement actions implemented by ISS as part of its ISS Ethix program.
There are different ways of implementing this commitment:
- Accounting for ESG criteria when exercising our voting rights;
- Encouraging companies to set up an ESG commitment;
Montpensier Finance has implemented and maintains operational a procedure to reasonably and quickly process eventual complaints made by its clients.
For any complaints, the client can send a mail to Montpensier Finance to the following address:
Responsable Conformité et Contrôle Interne
58 avenue Marceau
Montpensier Finance commits itself, from reception date:
- to acknowledge receipt within 10 working days, unless a response has been issued to the client within this period;
- To respond within 2 months. In case of incapacity to issue a response within this period, Head of Compliance and Internal control, keep the client informed of the exceptional circumstances causing this extension.
The Head of Compliance and Internal control and the COO, are hauthorized to deliver freely, on simple demand, any information relative to complaints handling procedure.
In the event of a rejection or refusal to totally or partially satisfy a client's demands, Montpensier Finance will give said client the competent mediator address and contact information.
Médiateur de l'AMF
Autorité des marchés financiers
17, place de la Bourse
75082 Paris cedex 02
AMF Ombudsman's Office website
Montpensier Finance may communicate information pertaining to the asset composition of the mutual funds it manages, in order to enable investors, notably institutional investors, to comply with their requirements, such as the 2009/138/CE Directive (Solvency II) regarding transparency.
Montpensier Finance makes sure that these investors acknowledge the DOC-2004-07 Position published by AMF regarding market timing and late trading practices, and that they have taken the necessary steps to ensure compliance, with a particular emphasis placed on the handling of sensitive information, as well as the ban on market timing or late trading practices. Informations are disclosed at least 48 hours after NAV publication.
Montpensier Finance updated its remuneration policy, in line with the provision of Directive 2014/91/EU, and Directive 2011/61/EU.
The company remuneration policy aims at promoting a sound and efficient risk management that do not incitate teams to take inappropriate risks with regards to the funds and management company risk profiles and that ensures that measures are set up to prevent potential conflicts of interest. The quality of each individual work is an important factor to determine the remuneration level ; it takes into account sustainability criteria.
The remuneration policy can be provided free of charge in hard copy on simple request to the management company.