Sustainable Finance Disclosure Regulation (“SFDR”)
KBA Consulting Management Limited
HFR Asset Management, LLC
(the “Investment Manager”)
HFReu Umbrella Trust
Integration of Sustainability Risks into the Investment Decision-Making Process
The Manager has delegated the investment management function for the Trust to the Investment Manager. The Investment Manager has sub-delegated this function for each of the sub-funds within the Trust (each a “Fund” and together the “Funds”) to certain investment managers who undertake the investment decisions on behalf of the Funds (each a “Trading Manager”). Therefore, the Manager does not itself integrate sustainability risks into the investment decision-making process and instead relies on the relevant policies and processes of the Trading Managers.
Under SFDR, “sustainability risks” are defined as environmental, social or governance events or conditions that, if they occur, could cause a material negative impact on the value of an investment.
Neuberger Berman Europe Limited (“Neuberger”) is the Trading Manager for: HFReu US Equity ex Financial Bull Fund; HFReu US Equity ex Financial Bear Fund; HFReu Euro Equity ex Financial Bull Fund; HFReu Euro Equity ex Financial Bear Fund. A downloadable copy of Neuberger’s SFDR statement can be found here.
Trutino Capital Management, LLC (“Trutino”) is the Trading Manager for HFReu Proximus Fund (the “Proximus Fund”). Trutino regards sustainability risks as relevant. A significant portion of the Proximus Fund’s portfolio is comprised of developed markets government bonds and liquid financial derivative instruments. Currently, there is insufficient information available regarding these bonds and liquid financial derivative instruments which fulfill the environmental or social characteristics required for the investment strategy. Consequently, it is not possible at present for the Trading Manager to properly integrate such risks into the investment decision-making process relating to the Proximus Fund, due to the high proportion of developed markets government bonds and liquid financial derivative instruments in the portfolio. Therefore, until such time as there is adequate information available regarding developed markets government bonds and liquid financial derivative instruments which fulfill the social or environmental characteristics required for the investment strategy, the Trading Manager is unable to assess the likely impact of sustainability risks on the return of Proximus Fund.
Principal Adverse Impacts Statement
Given that the investment management function of the Funds is delegated to the Trading Managers, the Manager relies on the investment policies and processes of those Trading Managers and, therefore, does not itself consider the principal adverse impacts of investment decisions on sustainability factors. Under SFDR, “sustainability factors” are defined as environmental, social and employee matters, respect for human rights, anti-corruption and anti-bribery matters.
Information on Neuberger’s approach to principal adverse impacts can be found here.
Trutino does not consider the principal adverse impacts of investment decisions on sustainability factors because data for Proximus Fund’s investment universe of liquid developed markets government bonds and financial derivative instruments are not available.
Remuneration and Sustainability Risks
The Investment Manager considers that the relevant remuneration policies in relation to SFDR are those of the Trading Managers. Neuberger has adopted remuneration policies consistent its regulatory obligations which promote sound and effective risk management and discourage risk taking, including, without limitation, with respect to sustainability risks. Information on Neuberger’s remuneration policies can be found here.
The remuneration policy of Trutino is consistent with its approach to the integration of sustainability risks. Trutino has established policies and procedures in relation to remuneration which, in Trutino’s opinion, are proportionate and consistent with sound and effective risk management in respect of all relevant risks, and which are compliant with applicable requirements.
A downloadable copy may be found here.