RESEARCH POLICY JANUARY 2018

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1 FOR PROFESSIONAL CLIENTS ONLY. NOT TO BE REPRODUCED WITHOUT PRIOR WRITTEN APPROVAL. PLEASE REFER TO ALL RISK DISCLOSURES AT THE BACK OF THIS DOCUMENT. RESEARCH POLICY JANUARY 2018

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3 CONTENTS 1 INTRODUCTION // 4 2 POLICY STATEMENT // 4 3 SCOPE // 4 4 RESEARCH // 4 5 RESEARCH AND MINOR NON-MONETARY BENEFITS // 4 6 RESEARCH ON NEW ISSUANCES // 5 7 RESEARCH TRIAL PERIODS // 5 8 CORPORATE ACCESS // 5 9 MONITORING FOR INDUCEMENTS // 5 10 UNSOLICITED RESEARCH // 6 11 NON-MIFID II THIRD PARTY COUNTRY RESEARCH PROVIDERS // 6 12 AFFILIATES CARRYING OUT EQUIVALENT MIFID AND NON MIFID II BUSINESS // 6 13 RESEARCH SERVICES AGREEMENT // 6 14 RESEARCH COMMITTEE // 6 15 RESEARCH POLICY REVIEW // 6

4 RESEARCH POLICY 1 INTRODUCTION The inducement and research rules of the Financial Conduct Authority (FCA), in implementing the Markets in Financial Instruments Directive (MiFID II), prohibits investment firms which carry out portfolio management services from receiving inducements (other than acceptable minor non-monetary benefits) in relation to those services. It is not acceptable for firms to receive research for free where no assessment has been made or where no payment arrangement is in place. Under the rules, third party research that is received by a firm providing investment services to Clients will not be considered an inducement if it is received in return for: direct payments by the firm out of its own resources; or payments from a separate Research Payment Account controlled by the firm. This Policy sets out the arrangements employed by Insight Investment Management (Global) Limited, Insight Investment International Limited 1, Insight North America 1, Cutwater Investor Services Corp 1 and Cutwater Asset Management Corp 1 (collectively Insight ), for the receiving and payment of research services. 2 POLICY STATEMENT Insight will act in accordance with the best interests of its Clients and will absorb all costs associated with any externally sourced investment research and will not charge Clients through the use of Client Research Payment Accounts. 3 SCOPE This Policy applies to all Insight legal entities detailed in section 1. 4 RESEARCH Insight has developed, and continues to expand its own independent research capability. Research, both external and in-house, is considered to be an important tool, adding value to our overall investment process. Insight uses research to allow fund managers to reach meaningful conclusions with regard to investment decisions. Research does not have to independently lead to a meaningful conclusion but can be combined with other research to allow a decision to be reached. Research is not limited in the form, but can take and includes (not exclusively) written research notes, publications, phone conversations, communications as well as person to person meetings, presentations and conferences. In line with FCA rules, Insight will make payment to brokers and other third parties (collectively research providers ) where we have grounds to be satisfied that the good or service received will reasonably assist in the provision of its services to Clients and is not likely to impair compliance with the duty to act in the best interests of its Clients. Insight will pay for research where the services received include any of the following criteria: directly relate to one or more financial instruments or other assets; concerns the issuers or potential issuers of financial instruments; closely relates to a specific industry or market such that it informs views on financial instruments, assets or issuers within that sector; explicitly or implicitly recommends or suggests an investment strategy and provides a substantiated opinion as to the present or future value or price of such instruments or assets; contains analysis and original insights and reaches conclusions based on new or existing information that could be used to inform an investment strategy; and be relevant and capable of adding value to Insight on behalf of Clients. 5 RESEARCH AND MINOR NON-MONETARY BENEFITS The inducement and research rules permit Insight to receive minor non-monetary benefits, without the services received constituting an inducement. Minor non-monetary benefits must be of a scale and nature that could not be judged to impair Insight s compliance with its duty to act honestly, fairly and professionally in the best interests of the Client. Insight will consider the following to be a minor non-monetary benefit: information or documentation relating to a financial instrument or an investment service, that is generic in nature; non-substantive material or services consisting of short term market commentary on the latest economic statistics or company results; research relating to an issue of shares, debentures, warrants or certificates representing certain securities by an issuer (see 6); research that is received so that the firm may evaluate the research provider s research service as part of a trial period (see 7); 1 US Entities registered as an Investment Adviser with the Securities and Exchange Commission (SEC). Pareto Investment Management Limited changed its name to Insight Investment International Limited with effect from 1 February

5 participation in conferences, seminars and other training events on the benefits and features of a specific financial instrument or an investment service; hospitality of a reasonable de minimis value, such as food and drink during a business meeting or a conference, seminar or other training events; is clearly disclosed prior to the provision of the relevant service to the client, which the firm may describe in a generic way; research that is in the public domain and is made freely available to both clients and non-clients; and services that are reasonable, proportionate and of a scale that is unlikely to influence Insight s behaviour in any way that is detrimental to the interests of the relevant client. Any non-monetary benefit that involves a third party allocating valuable resources to the investment firm shall not be considered as minor and shall be judged to impair compliance with the investment firm s duty to act in their Client s best interest. The assessment of whether material can be viewed as a minor non-monetary benefit will be done on an independent sample basis by the Research and Data Management Group and Compliance. Such assessments will not be based on the assurances given/alleged by the research provider (see 14). 6 RESEARCH ON NEW ISSUANCES Insight considers research material from a third party where they are contractually engaged and paid by the issuer as part of a primary capital raising event / new issuance, as a minor non monetary benefit. In addition, Insight considers that the ongoing distribution of research, where the third party firm is contractually engaged by the issuer, to be a minor non monetary benefit provided that: the relationship between issuer and research provider is clearly disclosed in the material; and that the material is made available at the same time to any firms wishing to receive it or to the general public. 7 RESEARCH TRIAL PERIODS Insight only permits research (other than minor non monetary benefits) from those third party research providers that have been approved by the Research and Data Management Group (see 14). In evaluating new research providers for inclusion on the approved list, Insight will engage in research trial periods to access the research capability. Such trial periods will be deemed an acceptable minor non-monetary benefit under the inducement and research rules. For research trial periods to be considered a minor non-monetary benefit the following must be observed: Insight can only receive a trial for up to three months; no monetary or non-monetary consideration will be forwarded to the research provider during the trial; and Insight should not accept a new trial with the same provider within a 12 month period from the date on which a previous trial, or existing research agreement, ceased. Research trial periods will be approved by the Research and Data Management Group prior to commencement and recorded in line with internal procedures. At the end of the trial period, Insight will either cease receiving research or establish a research agreement and payment terms (see 13). 8 CORPORATE ACCESS Corporate access is the service of facilitating contact between Insight and an issuer of securities or potential issuer of securities. Corporate access services offered by a third party that are by their nature exclusive, such as individual meetings or field trips with a corporate, may involve the allocation of valuable resources by the provider for which Insight will pay. Where corporate access is paid by the corporate or advisor to the corporate, such access will be considered a minor non-monetary benefit (see 5 and 6) for which no payment will be made. Where no such arrangement is in place, Insight will consider the arranging of corporate access to be a discrete service and will pay an arrangement fee. Insight will use both approved third party research providers and corporate brokers not on the approved list, to facilitate and arrange corporate access. Insight will carry out an independent assessment to determine if payment is due for the corporate access or if such access can be treated as a minor non-monetary benefit. Insight will also review and monitor corporate access payments to ensure the payments are appropriate to the access levels obtained and are not linked or is dependent on payments for research or execution services. 9 MONITORING FOR INDUCEMENTS Insight monitors the effectiveness of its research payments and on a regular basis and assesses whether the research received is in line with the research services agreement. Demonstrating adherence to the criteria does not necessarily involve an individual research assessment, but rather involves an assessment of research received over a period, indicating overall, that research payments are made in the manner described in the Policy. All inconsistencies with the policy are escalated to senior management and the Research and Data Management Group. Research agreements are subject to review by the Research and Data Management Group and reviewed annually. 5

6 10 UNSOLICITED RESEARCH Research services, other than acceptable minor non-monetary benefits, received outside a research agreement or trial period, will be deemed unsolicited. Insight will monitor the receipt of unsolicited research on a regular basis through automated monitoring and notification to Compliance. Compliance will review the research content and adopt the following actions: confirm that the material received is an acceptable minor non-monetary benefit; instruct the research provider to cease distribution; arrange for a trial period; and / or enter into a research agreement. 11 NON-MIFID II THIRD PARTY COUNTRY RESEARCH PROVIDERS Insight may receive research services from research providers which are not subject to MiFID II. In engaging with such providers, Insight will adhere to the rules on inducements and investment research across all Insight entities (see 1) regardless of geographical location when conducting MiFID business. 12 AFFILIATES CARRYING OUT EQUIVALENT MIFID AND NON MIFID II BUSINESS Insight delegates portfolio management to affiliates within the Insight group located outside the territorial scope of MiFID II. When such delegation involves MiFID business, Insight will only use research providers where a research agreement is established or is received during a trial period. In the absence of a separate research invoice or research agreement, Insight will among other things, consult with third parties, including the third country broker-dealers, with a view to determining the charge attributable to the research provided. Insight recognises that if research is received by a non-eu affiliate, it cannot be distributed freely to an affiliate and any redistribution must be paid by the EU investment manager. Research received for non MiFID business, outside the territorial scope of MiFID II will not be subject to the inducement and research rules. For example Insight North America acting as investment advisor for US Clients will not be subject to the inducement and research rules of MiFID II. 13 RESEARCH SERVICES AGREEMENT Prior to the receipt of research services, Insight will establish a research services agreement with third party research providers to ensure that the services received are not considered an inducement. The agreement will be approved by a member of the Research and Data Management Group prior to commencement and recorded in line with internal procedures. Agreements will be reviewed periodically. 14 RESEARCH COMMITTEE Insight will review its research arrangements regularly through The Research and Data Management Group (RDMG). The RDMG is responsible for overseeing the operational and financial processes and procedures required to maintain compliance with regulations related to research consumption as well as managing the financial impact of consuming research and market data. The committee is co-chaired by the Chief Investment Officer of Active Management and the Chief Investment Officer of Solutions and attended by the Head of Specialist Equities, Head of Credit Analysis, Head of Trading, Operations, Finance, Corporate Risk and Compliance. 15 RESEARCH POLICY REVIEW Insight will review its research arrangements regularly through the RDMG. Insight reviews its Research Policy at least annually or whenever a material change occurs and will notify Clients of any material change. A material change shall be a significant event that could impact Insight s ability to receive research and the payment thereafter. Notification of changes to the policy may be made via the Insight website at the following link: 6

7 FIND OUT MORE Institutional Business Development European Business Development Consultant Relationship Management Client Relationship Management company/insight-investment This document is a financial promotion and is not investment advice. Unless otherwise attributed the views and opinions expressed are those of Insight Investment at the time of publication and are subject to change. This document may not be used for the purposes of an offer or solicitation to anyone in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation. Insight does not provide tax or legal advice to its clients and all investors are strongly urged to seek professional advice regarding any potential strategy or investment. Issued by Insight Investment Management (Global) Limited. Registered office 160 Queen Victoria Street, London EC4V 4LA. Registered in England and Wales. Registered number Authorised and regulated by the Financial Conduct Authority. FCA Firm reference number Insight Investment. All rights reserved

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