Investment Regulations

Transcription

1 Investment Regulations Liberty BVG Collective Foundation

2 Table of contents Art. 1 Purpose and scope Art. 2 Principles Art. 3 Asset management guidelines Art. 4 Resources Art. 5 Responsibilities and powers Art. 6 Qualification criteria for asset managers, consultants and intermediaries as contractual partners Art. 7 Controlling Art. 8 Investment principles A. Individual asset management (Pool Invest und Mandate Invest) Art. 9 Choice of investments and investment strategy Art. 10 Asset manager selection procedure Art. 11 Change in strategy Art. 12 Special tasks and powers B. General investment rules Art. 13 Investment categories and bandwidths Art. 14 Investment fluctuation reserves Art. 15 Foreign currencies Art. 16 Derivative investments Art. 17 Securities lending Art. 18 Real estate investments Art. 19 Accounting principles Art. 20 Reporting and controlling Art. 21 Reporting Art. 22 Underfunding Art. 23 Corporate governance Art. 24 Integrity and ethics in asset management Art. 25 Remuneration of external asset managers Art. 26 Omissions in the Regulations Art. 27 Amendments Art. 28 Authoritative language Art. 29 Validity Annex I: Annex II: Annex III: Authorised derivative instruments and strategies Minimum ratings Evaluation details

3 Investment Regulations Art. Relying 1 Purpose on Article and 9 scope of its Charter, the Board of Trustees of Liberty BVG Collective Foundation (the Foundation ) has adopted the following Investment Regulations: 1 Pursuant to statutory requirements, these Regulations set out the rules and principles to be observed in the management and investment of pension assets and regulate the organisation of the Foundation s asset management operations. The Foundation shall comply with these Regulations at all times. Art. 3 Asset management guidelines 2 These Regulations constitute binding guidelines for all natural and legal persons involved in the Foundation s asset management operations. 3 The members interests alone shall prevail. 4 These Regulations shall be reviewed at least once a year and adapted as necessary. Art. 2 Principles 1 The Foundation Board has the overall responsibility for the management of the Foundation s assets and shall define asset management targets and principles in accordance with statutory prescriptions. 2 The Foundation is responsible for the proper administration of the pension assets in compliance with the BVG, BVV2/OPP2, LFLP/FZG and FZV/OLP. It shall invest the pension assets with financial intermediaries such as banks, securities brokers, fund managers or investment funds and shall ensure that the assets are managed only by asset managers that are subject to FINMA or OAK BV/CHS PP (the independent regulatory authority for occupational benefits institutions) regulatory oversight. 3 The Foundation offers its own BVG-compliant investment products or those developed in cooperation with contractual partners. 4 The Foundation offers a choice of custodian banks and asset managers which may be changed at any time for important reasons. 5 The Foundation requires all partners acting as asset managers to deliver a written confirmation of compliance with integrity and ethics in asset management once a year. 6 Potential conflicts of interest shall be avoided by the systematic separation of execution and controlling functions. 7 Asset management and administration fees and charges shall be stipulated in the account opening documentation and/or Fee Schedule. 1 Liquidity: The Foundation shall at all times be capable of punctually disbursing promised benefits. 2 Security: The Foundation shall adopt an investment strategy consistent with its risk tolerance and capacity for risk. The Foundation and the external asset manager shall appraise the Foundation s risk tolerance and capacity for risk in accordance with recognised standards. 3 Diversification: Risk diversification principles shall be obser ved at all times and compliance shall be conclusively documented and demonstrated. 4 Investment risk/profitability: Assets shall be invested and managed so as to attain the best possible global return within the limits of the defined capacity for risk, and focusing on longterm performance. Art. 4 Resources In implementing its investment strategy, the Foundation shall apply the following instruments: a. investments shall be restricted to authorised instruments, maximum positions and contractual partners satisfying quality standards; b. planning and controlling instruments and the ongoing monitoring and analysis of investment results and risks with reference to the chosen investment strategy and the related targets. In deciding the investment strategy, the Foundation may consult external investment experts. The Board of Trustees shall ensure the implementation of smooth and constant monitoring and controlling. Art. 5 Responsibilities and powers 1 The Foundation s investment management organisation comprises three levels: Board of Trustees Management Pension Fund Committee, in the case of individual asset management at affiliated pension fund level (Pool Invest or Mandate Invest). 2 The Board of Trustees bears ultimate responsibility for the investment and management of the Foundation s assets. The Foundation may delegate its asset management to external

4 asset managers, but the Board of Trustees shall retain ultimate responsibility for oversight and strategic decisions (determination of investment categories and bandwidths). 3 Management is responsible for periodically informing members at the appropriate levels. 4 The Board of Trustees shall be responsible for deciding the Foundation s investment strategy. 5 The Foundation may empower a pension fund to decide under its own responsibility how its pension assets shall be invested ( individual asset management ). For this purpose, the Foundation may offer two forms: an investment pool for several pension funds (Pool Invest), and Client Investment for individual pension funds (Mandate Invest), in which case the Board of Trustees may define the relevant conditions for admission with particular regard to the risk capacity of the relevant pension fund. 6 The Board of Trustees shall be responsible for deciding which investment pool is made available to a pension fund in the framework of its individual asset management (Pool Invest), and for setting the investment strategies (Mandate Invest). The Board of Trustees shall approve the investment strategies of the investment pool (Pool Invest) and of Mandate Invest. 7 For affiliated companies with individual asset management (Pool Invest or Mandate Invest), asset management and investments shall remain within the purview of the relevant pension fund committee. In this case, strategic decisions (determination of investment categories and bandwidths) shall be delegated to the pension fund committee; however, the Board of Trustees shall retain oversight. In the contractual documentation regulating individual asset management (affiliation contract and account and security deposit opening forms), the employer and the pension fund committee shall be made expressly aware of the risks of loss in asset value and negative performance connected with individual asset management. By signing the affiliation agreement, the employer and the pension fund committee confirm that they have been made aware of these risks and acknowledge that the Foundation cannot under any circumstances be made liable for, or be required to compensate, any losses. 8 The Foundation shall only entrust the investment and management of pension assets to persons and institutions which have the necessary expertise and organisation and who are able to guarantee compliance with Articles 48f and 48g to 48l BVV2/ OPP2. Third parties and institutions shall satisfy the qualification requirements in Article 6. The asset manager has the following duties: a. implementation of the investment guidelines and asset allocation decided by the Board of Trustees and the investment pool (Pool Invest); b. implementation of the investment guidelines and asset allocation of a pension fund (Mandate Invest); c. monitoring of statutory and regulatory framework conditions; d. monthly reporting to Management and the Board of Trustees and in the case of individual asset management to the relevant pension fund committee; e. presentation of annual results to a meeting of the Board of Trustees; f. regular (at least once a year) ) monitoring of custodian banks in terms of quality of service and costs. 9 Potential conflicts of interest shall be avoided through systematic separation of executive and controlling functions. Art. 6 Qualification criteria for asset managers, consultants and intermediaries as contractual partners 1 To qualify for an asset management contract, asset managers must be financial intermediaries, i.e. banks, securities brokers, fund managers or KAG asset managers, under FINMA regulatory oversight or they must be certified by the independent regulatory commission (OAK BV/CHS PP), i.e. recognised as being qualified to manage assets. 2 Contractual partners acting only as consultants or intermediaries shall be members of a FINMA-approved SRO (self-regulatory organisation) or they must be subject to FINMA direct oversight in the framework of the MLA (Money-Laundering Act). The current list of approved SROs is published on the FINMA homepage ( FINMA recognises the following SROs in particular: a. Swiss Association of Asset Managers (VSV/ASG) b. Financial Services Standards Association (VQF) c. Association romande des intermédiaires financiers (ARIF) d. Allg. Selbstregulierungs-Verein (SRO PolyReg) e. Organismo di Autodisciplina dei Fiduciari del Cantone Ticino (OAD FCT) f. SRO des Schweizerischen Anwalts- und Notarenverbandes (SRO SAV/SNV) 3 Contractual partners shall in any event submit the following documents with the agreement: a. Proof of membership in an SRO (self-regulating body) or FINMA authorisation. 4 Applications for exceptions must be submitted in writing and approved by the Board of Trustees. Art. 7 Controlling 1 Management, and in the case of individual asset management, the pension fund committee, shall check the asset managers performance calculations and transactions lists once a month. 2 The investment accounting department shall reconcile the custodian bank statements with the Foundation s books once a month.

5 3 Management shall report quarterly to the Board of Trustees. The Board of Trustees shall monitor the mandates on a quarterly basis. 4 The Board of Trustees shall oversee the annual performance of the Foundation, investment pool and pension funds once a year, in absolute terms and against the strategic benchmarks. It shall decide whether a new investment strategy is required and shall modify bandwidths within the approved strategy. 5 In the case of individual asset management and depending on the performance, funded status and risk capacity of a pension fund, the Board of Trustees or the Manager appointed by the Board of Trustees may intervene with the pension fund committee and request a change in the chosen investment strategy; if the pension fund committee does not react in a timely manner to the request of the Board of Trustees or of the Manager appointed by the Board of Trustees, or in the event an investment pool or a pension fund is underfunded, the Board of Trustees or the Manager appointed by the Board of Trustees may order the change directly. 7 The minimum ratings for nominal asset investments and counterpart ratings are stipulated in Annex II. 8 If a security is reclassified and falls below the minimum authorised rating, it shall be sold within 60 calendar days. If that is inappropriate or impossible, the asset manager shall obtain a decision from the Board of Trustees through Management. 9 In the case of collective investments, compliance with Article 56 BVV2/OPP2 shall be assured at all times. 10 The Board of Trustees, or the pension fund committee in the case of Mandate Invest, may make use of the extended investment possibilities contemplated in Article 50(4) BVV2/OPP2. Compliance with Article 50(1) to (3) BVV2/OPP2, or the use of extended investment possibilities as the case may be, must be conclusively reported in the notes to the financial statements. Investments involving an obligation to make additional payments are not permitted in the framework of extended investments either, save for investments in individual properties in accordance with Article 53(5)(c) BVV2/OPP2. Art. 8 Investment principles 1 As a rule, pension assets may be invested in all the investment categories foreseen under the BVG/LPP and BVV2/OPP2. Foundation assets may namely be invested in collective funds subject to BVV2/OPP2 guidelines (BVV2/OPP2-compliant funds). The Board of Trustees shall set bandwidths for the individual investment categories. In setting the bandwidths, the Board of Trustees shall take into account the Foundation s risk capacity, risk tolerance and the structure of its liabilities. 2 The authorised investments in each category are listed exhaustively in these Regulations. Investments involving an obligation to make additional payments are not allowed, save for investments in individual properties in accordance with Article 53(5)(c) BVV2/OPP2. 3 The use of derivative instruments is restricted. 4 Investments shall be made in liquid, readily negotiable instruments. Hedge funds are an exception and are subject to special conditions. 5 One or more benchmarks are laid down for each investment category. The benchmarks serve to measure market returns and market risk for each investment category and shall be defined in the framework of the investment strategy in Annex I. 6 Within the defined bandwidths, deviation from the benchmarks is possible at strategic and asset manager level with a view to improving effectiveness and maximising returns. Performance shall be measured on an ongoing basis. Performance-related over- or under-stepping of bandwidths shall be corrected at least once a month. A. Individual asset management (Pool Invest and Mandate Invest) Art. 9 Choice of investments and investment strategy 1 Each pension fund (pension fund committee) shall select its individual investment strategies from the range of investment strategies offered by the Foundation or pension fund (Pool Invest and Mandate Invest) and communicate their choice, and any changes therein, in writing on the ad hoc account and securities deposit opening form. 2 Based on a pension fund s capacity for risk, the Foundation or an asset manager authorised by the Foundation shall decide if the proposed investment strategy or investment strategy changes can be executed in the requested scope. 3 Pool Invest: separate accounts shall be kept for each investment pool. The non-committed assets and investment fluctuation reserves of each pension fund will be credited, or charged as the case may be, with the pension fund s pro rata share of the investment pool s investment income and gains or losses in asset value. 4 Mandate Invest: separate accounts shall be kept for each pension fund. All investment income and gains or losses in asset value shall be credited, or charged as the case may be, to the pension fund s non-committed assets and investment fluctuation reserves. 5 For individual asset management purposes, the Foundation shall maintain a securities deposit and an account for each pool and each pension fund with a custodian bank designated by the Board of Trustees.

6 Art. 10 Asset manager selection procedure B. General investment rules 1 The pension fund committee shall deliver to the Foundation a power of attorney in favour of an asset manager approved by the Foundation. 2 The Foundation shall give the relevant asset manager a power of attorney for the custodian bank selected by the pension fund committee from the list of banks proposed by the Foundation. 3 The asset manager shall issue stock orders directly to the custodian bank. 4 The cash balance on the pension fund s account must always be sufficient to cover the charges debited to the account. Art. 11 Change in strategy 1 By written notice and subject to the consent of the Foundation and the designated asset manager or consultant, the pension fund committee may at any time change investment pool or investment strategy within the framework of the investment strategies offered by the Foundation. In that case, the asset manager or consultant shall review the risk check, risk profile and investment strategy of the pension fund and file them with the Foundation. Whether and to what extent the requested change in investment strategy will be approved shall depend in particular on the pension fund s actuarial capital, available investment fluctuation reserves and its risk check. 2 In the framework of Mandate Invest, changes in investment strategy must be notified to the Foundation in writing on the relevant form. The pension fund committee may not authorise adjustments in the investment strategy within the applicable bandwidths (asset allocation). Only asset managers approved by the Foundation are authorised to undertake adjustments within the bandwidths (asset allocation) of the proposed investment strategies with a view to safeguarding the risk profile. 3 The desired change in strategy will only be implemented once the written notification is received. The Foundation and the designated asset manager or consultant may defer implementation of investment decisions made by the pension fund committee for up to 6 months, or refuse such decisions altogether relying on Article 50(2) BVV2/OPP2. Art. 12 Special tasks and powers 1 In respect of the asset manager selected by the pension fund (pension fund committee) from the asset managers approved by the Foundation and the individual investment strategy chosen from the investment strategies offered by the Foundation, the Foundation shall ensure that the pension fund committee communicates its investment strategy and any changes therein in writing. Art. 13 Investment categories and bandwidths 1 Investment restrictions Categories Category limits Individual limits Claims 50% Swiss 10 % per debtor mortgage securities, with the exception of: mortgage bonds Confederation and mortgage credit institutes Foreign securities 30 % unhedged Bonds 100 % 10 % per debtor Excepted are: Confederation and mortgage credit institutes Equities 50 % 5 % per participation Real estate 30 %, of which 5 % per property maximum 30 % lending against ¹/ ³ foreign market value Alternative 15 % claims under Investments Art.53(3) BVV2/OPP2 (effective ) For the rest only collective investments with no additional payment obligation Indirect 100 % investments BVG compliant 2 Bandwidths Claims (e.g. bonds) % Claims Swiss mortgage securities Mortgage bonds 0 50 % Domestic real estate 0 30 % Foreign real estate 0 10 % Equities 0 50 % Alternative investments 0 15 % Indirect BVG-compliant investments % Foreign currencies 0 30 % 3 Annexes Annexes I and II constitute integral parts of these Regulations. Art. 14 Investment fluctuation reserves 2 If investment limits are overstepped, management may correct the pension fund s investments. The creation of investment fluctuation reserves shall be regulated by the Regulations on Reserves.

7 Art. 15 Foreign currencies Foreign currency investments representing up to 30 % of Foundation assets do not need to be hedged. Over this 30 % limit, each additional foreign currency transaction must be hedged. Art. 16 Derivative investments 1 In principle, all the Foundation s investments shall be made in the basic instruments. 2 Derivative instruments are only authorised on the basis of defined strategies. Derivative instruments shall be used to hedge positions, for tactical variations, to improve returns, as an inexpensive way to transfer investments and for diversification purposes. The authorised instruments and strategies are exhaustively enumerated in Annex 1. 3 Any liabilities arising from derivative transactions must be secured by cash or securities on an ongoing basis. The use of derivatives may not have the effect of leveraging total assets. 4 Investments in derivatives shall satisfy the requirements of Article 56a BVV2/OPP2. Practice in the matter of additional payment obligations is regulated in the Mitteilung über die berufliche Vorsorge Nr. 50 (occupational benefits bulletin N 50). Art. 17 Securities lending 1 To improve returns, securities may be lent to banks which have the minimum rating defined in Annex II. The securities lent must be secured by collateral. Details shall be regulated in a securities lending agreement. 2 The legislation covering collective funds applies mutatis mutandis (Article 55(1)(a) of the Law on Collective Investment Funds [SR ], Article 76 of the Ordinance on Collective Investment Funds [SR ], Article 21 et seq. of the Federal Banking Commission Ordinance of 24 January 2001 on Investment Funds [SR ]). Art. 18 Real estate investments Real estate investments may take the form of collective investments, direct investments (individual ownership or co-ownership) or real estate projects. Collective real estate investments include, in particular: shares of listed real estate funds shares of listed holding companies investing in real estate claims on investment foundations co-ownership shares in real estate property. Real estate projects include: building land new building projects property encumbered with building leases demolition objects construction projects for subsequent sale. The Board of Trustees shall define the requirements and financing criteria for direct investments and projects. Art. 19 Accounting principles Cash, time deposits and claims are stated at nominal values; all other investments are stated at market value. Exceptions are subject to Board of Trustees approval. Further details on evaluations are in Annex III. Art. 20 Reporting and controlling Reporting and controlling shall be organised to ensure that all necessary material information is received reliably and in good time, and the necessary degree of transparency for effective asset management is achieved and maintained on an ongoing basis. Art. 21 Reporting The persons entrusted with asset management shall report to the Board of Trustees, and in the case of individual asset management, to management and the relevant pension fund committee(s) on a quarterly basis. Their reporting shall essentially cover the investments made, investment performance (global and by category), compliance with the investment strategy, tactical bandwidths and investment guidelines. Reporting should also justify the use of derivatives and any variances with benchmark performance or other targets. Art. 22 Underfunding In the event of underfunding, the Board of Trustees shall review, and if necessary correct, the investment strategy of the Foundation, investment pool or pension fund; it shall also adopt the necessary recovery measures to eliminate the underfunding of the Foundation, investment pool or pension fund, as the case may be. Art. 23 Corporate governance 1 If possible, voting rights shall be exercised. As regards the voting rights and disclosure obligations under the ordinance against excessive fees in listed companies (VegüV, in force since 1 January 2014) in respect of the equities held by the Foundation, the Foundation shall set forth the rules and particulars for the exercise of voting rights in a separate annex in the framework of the legal prescriptions (see Annex IV). 2 If and insofar as the VegüV ordinance is not applicable, the following provisions shall apply: 3 Voting rights shall be exercised by the asset managers of the equity portfolio unless otherwise decided by the Board of Trustees in any specific case. Voting rights may also be assigned to institutional investors shareholder services. 4 If there are no special circumstances, voting rights shall be exercised in accordance with the proposals of the board of directors, unless the Board of Trustees instructs otherwise in any individual case.

8 5 In extraordinary circumstances (especially in the case of takeovers, mergers, significant changes in the board of directors or executive committee, objections to board proposals), the Board of Trustees shall decide how voting rights are to be exercised and shall issue the necessary instructions. Art. 20 Integrity and ethics in asset management 1 Basic principle: The persons and bodies involved in asset management operations shall comply with the provisions of Federal Law concerning ethics in asset management (Articles 48f to 49a BVV2/ OPP2). 2 Code of conduct: The internal and external agents of the Foundation shall satisfy the following requirements and rules of conduct: a. They shall have the necessary skills, qualifications, professional background and reputation to execute the tasks assigned to them in members best interests; b. Relatedparty transactions shall be admissible provided they serve the interests of all members. Related-party transactions shall be individually approved by the Board of Trustees and shall be submitted to the auditor with the annual accounts. c. In the case of significant related-party transactions, the Board of Trustees shall request at least two competing offers and shall ensure that the offers are appraised objectively and transparently. The decision-making process shall be documented so as to ensure full and proper verification by the auditor during the annual audit. The decision shall be made in the interest of all members. d. All principal transactions involving the same securities as those traded by the Foundation and exploiting insider information about Foundation transactions for personal advantage and enrichment are strictly prohibited. This includes front running, parallel running and after running. e. All pecuniary benefits shall be surrendered to the Foundation. Small gifts not exceeding a total value of CHF 2,000 per year are excepted. f. All persons and entities involved in the Foundation s asset management operations (in particular asset managers, investment consultants, custodian banks and brokers) shall confirm in writing once a year that they have not received any additional pecuniary benefits in the scope of their activities for the Foundation other than the fees specified by written agreement or, alternatively, that any pecuniary benefits received by them have been fully surrendered to the Foundation. Additional pecuniary benefits include any sources of revenue which would disappear if the mandate relationship were terminated. g. All private business ties and interests shall be disclosed to the Board of Trustees. The governing bodies of the Foundation are strictly bound by an obligation of confidentiality. h. All involved persons and institutions shall be strictly bound to secrecy with regard to all confidential information acquired by them in the scope of their activities for the Foundation. Art. 21 Remuneration of external asset managers 1 Asset management fees shall be contractually agreed or calculated based on the managed assets or a performance-oriented formula, or they shall be based on a combination of the three elements. 2 Asset managers shall undertake to promptly and automatically transfer to the Foundation any pecuniary advantages (such as retrocessions, finder s fees, management commissions, or other) received by the asset manager or its employees (board members, staff) from third parties (especially banks, fund managers, etc.) in the scope of the asset management mandate. Art. 22 Omissions in the Regulations If any provision has been omitted from these Regulations on any specific point, the Board of Trustees shall adopt an appropriate rule. Art. 23 Amendments The Board of Trustees may amend these Regulations at any time in accordance with the law, legal ordinances and the Foundation Charter. The currently valid version is available at or may be obtained from the Foundation. These Regulations, the Annexes and any subsequent amendments shall be submitted to the Regulatory Authority. Art. 24 Authoritative language These Investment Regulations shall be construed and interpreted in the German-language version. Art. 25 Validity These Investment Regulations shall come into force on 1 January 2016; they shall replace and supersede the prior Investment Regulations of 1 January Schwyz, 23 November 2015 Board of Trustees of Liberty BVG Collective Foundation

9 Annex I The following derivatives and strategies are authorised: Money market Long currency Short currency, including futures up to 12 months Equities Long call Long put Short call Short put or combinations of the above Short index futures Bonds Short futures on government bonds Annex III a. Cash balances, certificates of deposit, money market investments and mortgage bonds stated at nominal value. b. Bonds, shares and collective investment units stated at market value on the reference date. The rates indicated by the custodian bank are authoritative. c. Currencies are valued at the exchange rates on the reference date. The rates indicated by the custodian bank are authoritative. d. Loans are stated at nominal value subject to any necessary valuation adjustments. e. Real estate is valued using the DCF method. For real estate projects, current costs and investments are capitalised. f. Hedge funds are stated at the last available market price or net asset value. There may therefore be a time lag of several months in the valuation. Annex II The following minimum S&P ratings are authorised: Money market Swiss bonds Foreign bonds in CHF Foreign bonds in foreign currency Loans to public corporations and institutions OTC transactions A Investment Grade Investment Grade Investment Grade A A For counterparts and borrowers without an S&P rating, the reference risk classification is Moody s or Fitch. If there is no corresponding rating, the custodian bank s risk classification applies.