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Questions & Answers

General questions

Q: Are specific benchmarks foreseen for the different lots?

A: Yes, the benchmarks associated to the different lots are referenced in the draft version of the Issue Document, the latter being part of the consultation documents. They are as follows:

  • Lot 1: Citigroup Eurodeposit 3 months expressed in EUR;
  • Lot 2: Barclays Capital Euro Aggregate excluding securitized assets Index Total Return expressed in EUR;
  • Lot 3: Barclays Capital Global Aggregate excluding securitized assets Index Total Return hedged into EUR;
  • Lot 4: MSCI World Total Return (net) expressed in USD and converted into EUR.

Q: Are "carve-outs" accepted as reference (for example for performance figures)?

A: "Carve-out" portfolios of broader mandates are acceptable if the composite fulfils all GIPS requirements and disclosures regarding "carve-outs". The use of "carve- out" has to be fully disclosed.

Q: If a tendering company operates with a multi affiliate structure, can two (or more) asset management companies within that structure compete for the same lot, knowing that the given asset management companies are independent from each other?

A: Each tendering company should decide which of his strategies best suits the investment objectives and guidelines of the FDC and that given strategy should be used in the current request for proposals. One proposal can not include several strategies. It needs a separate proposal from a separate legal counterparty (fulfilling the minimum criteria and having the appropriate approval on its own) to hand in proposals for different strategies.

Q: With respect to Lot 3 and Lot 4, would FDC be open to have a section of the allocation managed as a Smart Beta strategy? Should this be a possibility how much, if any, weight will be placed on the historical track record of the Smart Beta strategy?

A: With regard to Lot 3, the tendering company is free to choose the best investment strategy that is in line with FDC's investment guidelines and restrictions. The tendered mandate of Lot 4 is a fully indexed mandate that does not foresee an active component.

Q: With respect to Lot 3, can a tendering company hand in a track record based on the standard Barclays Capital Global Aggregate Index, i.e., a track record including securitized assets?

A: With regard to Lot 3, FDC will accept track records including securitized assets knowing that each tendering company should decide which track record is the most representative for the Lot for which a proposal is submitted. Furthermore, if a track record deviates from the guidelines (for example by including securitized assets), please state this clearly in the questionnaire and state the performance impact of any investments not in line with the benchmark associated to a respective Lot.

Q: Are off-benchmark positions allowed for any Lot?

A: No, off-benchmark positions are not allowed.

Q: Is a full delegation of the portfolio management services to an entity within the same group allowed?

A: Yes, this is allowed.

Q: With regard to Lot 4, mandates would allow a tracking error of 0.5%. Would FDC consider an offer that actively uses this tracking error budget vis-à-vis a passive solution?

A: The tendering company is free to choose the best investment strategy that is in line with FDC's investment guidelines and restrictions knowing that the tendered mandates of Lot 4 are fully indexed mandates that do not foresee an active component. Nevertheless, another strategy can be handed in as long as the minimum requirements and FDC's investment guidelines and restrictions are respectively stay fulfilled.

Q: With regard to Lot 1, Lot 2 and Lot 3, are there any duration constraints?

A: No, there are no specific duration constraints for lots 1, 2 and 3. However, it is reminded that, regardless the investment strategy offered, the proposal must always comply with the terms and conditions of the Investment Management Agreement as well as with the investment guidelines stated in the Issue Document (e.g., tracking error, performance target, allowed investment universe, etc.).

Q: Is there a minimum track record requirement for any of the Lots? Will FDC accept a back-test in case of a short track record or no live track record?

A: Please note that there is no minimum track record requirement, but the FDC is looking for and will evaluate track records which are GIPS-compliant composites (a missing GIPS composite can have an influence on the respective scoring). Back-tested data series are not considered as track records.

Q: Can a track record in another currency than EUR be submitted?

A: Please note that the track record has to be stated in EUR knowing that each tendering company is free to convert a track record in other currencies into EUR.

Q: With regard to Lot 4, would FDC be open to a proposal adding a sustainable approach/sustainable research to the requested indexed management?

A: The tendered mandate of Lot 4 is a fully indexed mandate that does not foresee an active component or a sustainable approach/sustainable research. This being said, adding a sustainable approach/sustainable research is not forbidden, but each tendering company should decide which of his strategies best suits the investment objectives and guidelines of the given lot and that strategy should be used. Additionally, it is reminded that, regardless the investment strategy offered, the proposal must always comply with the terms and conditions of the Investment Management Agreement as well as with the investment guidelines stated in the Issue Document (e.g., tracking error, performance target, allowed investment universe, etc.).

Q: Is FDC's SICAV submitted to the AIFM directive?

A: Please note that FDC's SICAV is exempt from the AIFM directive.

Q: Does FDC's SICAV engage in securities lending?

A: No, securities lending is not allowed.

Q: Does FDC's exclusion list also apply to indexed mandates (i.e. to Lot 4)?

A: Yes, FDC's exclusion list has also to be applied for indexed mandates.

Questions regarding the consultation guidelines

Q: The Consultation Guidelines mention on page 8 under section 2.9 Minimum requirements and appropriate approval that the tenderers must have, at the moment of proposal remittance, a minimum of assets under management for institutional clients of EUR five (5) billion for Lot 1, Lot 2 and Lot 3 and EUR ten (10) billion for Lot 4. Does that mean that for each Lot (Lot 1, Lot 2 and Lot 3), the assets under management of related funds managed must be equal or larger than EUR 5 billion (hence a total of EUR 15 billion)? Alternatively, does that mean that the sum of assets under management for Lot 1, Lot 2 and Lot 3 aggregated must be equal or larger than EUR 5 billion?

A: To tender for the Lots 1, 2 and 3, it is sufficient to have a minimum of assets under management of EUR five billion for institutional clients (as defined in the Consultation Guidelines), this regardless of the Lot considered. This being said, a tendering company with more than EUR five billion assets under management for institutional clients can for example submit offers for all three Lots (i.e., Lot 1, Lot 2 and Lot 3).

Q: With regard to the minimum requirements set out in section 2.9 of the Consultation Guidelines, can you please confirm whether a UK based firm will be considered as an investment manager for these mandates? Alternatively, are UK firms excluded?

A: For the current request for proposals, FDC is still considering the United Kingdom as a member state of the EU and United Kingdom based firms holding the appropriate approval and authorisation as asset managers within the EU. This being said, the FDC can currently not foresee possible implications of the United Kingdom leaving the EU.

Q: With regard to the minimum assets under management requirement set out in section 2.9 of the Consultation Guidelines, can you please confirm at what level this requirement has to be considered?

A: The minimum assets under management requirement has to considered at contracting counterparty level (i.e. at tendering company level).

Q: With regard to section 3.5.1 of the consultation guidelines, are electronic initials and signatures accepted?

A: Yes, electronic initials and signatures are accepted.

Questions regarding the Questionnaire

Q: Does question 6.11 refer to providing an example of an internal investment research piece (for example a stock note) or a periodic report? If the latter, is this required at fund level or at firm level (for example a PRI report)?

A: Internal investment research is part of the investment process and can be used to support for example the answers to questions 6.2, 6.3 or 6.12. The tendering company should show in question 6.11 whether it is able to provide a client specific sustainability report on portfolio/mandate level.

Q: Questions 2.16 and 10.2 are relative to GIPS compliance. Is not being GIPS compliant a serious disadvantage to qualify for the request for proposals?

A: GIPS compliance is not a minimum requirement and therefore even without GIPS compliance a tendering company is eligible for the request for proposals. However, GIPS compliance is relevant for the questions specifically addressing the subject of performance in the Questionnaire and a missing GIPS composite can have an influence on the respective scoring.

Q: Is question 5.11, item i) also relevant to the indexed equity mandate highlighted under Lot 4?

A: Sometimes an investment strategy of an asset manager might not be in line with the tracking error target of the FDC. In this case, it might be necessary to adopt the strategy to scale the tracking error to the desired level. Please describe in the answer to this question whether you are able to do so.

Q: Is question 6.10 strictly referring to mandates or can funds and/or products also be referenced?

A: The given question refers to a tendering company's experience with regard to incorporating a sustainable approach/sustainable research, this regardless of the legal form of the investments (mandates, funds, etc.).

Q: With regard to question 6.7 and the model portfolio, what level of detail is required and is there a specific format to use?

A: Please provide the sustainability model portfolio via a separate Excel file knowing that there is no predefined format set by the FDC. For consistency reasons, the tendering company might use the same format than the format in FDC's Excel Questionnaire. Normally, model portfolios include a list of the foreseen securities on a single security level but it is up to the tendering company to indicate all data deemed to be relevant to the FDC and to allow FDC a full understanding of the answer to the respective question and a subsequent appropriate evaluation of the given question.

Q: With regard to question 11.1, the tendering company is asked to indicate the fee rates for different investment volume levels. What fee scale should be used (decreasing fee scale, conditional fee scale, etc.)?

A: Please note that a tendering company is free to choose the fee scale knowing that, as mentioned in the Questionnaire, a performance fee structure is not an option for the FDC. In the referenced tabs of the Excel Questionnaire (performance file), the fees must be calculated for the stated volumes given the chosen fee scale.

Questions regarding the Issue Document

Q: Could you please provide us with some clarification about how you define the "adjusted delta" method?

A: To calculate the economic exposure, the real exposure of derivatives (using the respective deltas) has to be calculated.

Q: With regard to the bond mandates, the Issue Document is mentioning that the assets have to be invested in bonds (and similar assets) included in the benchmark at the moment of purchase and bonds (and similar assets) to be included in the benchmark in the next 60 days. Has this to be considered at an issuer level or individual security level?

A: This has to be considered at individual security level.

Questions regarding the Investment Management Agreement

Q: Appendix C, section 10.2 states a minimum claim threshold of 250 USD regarding debit interest regularisation. The current threshold for claims is 500 USD per market recognized standards (ISITC). Could FDC confirm the 250 USD threshold and provide clarification on why this is below the market recognized standard?

A: FDC confirms the 250 USD threshold. This was a decision by the Board of Directors to apply another limit as the market recognized standard.

Q: How should section 7.2.1. (d) of the Investment Management Agreement be read?

A: As mentioned in the given section, the fund manager has the right to use all legal means at its disposal to obtain the documents, the amounts due or any compensation from such third party and agrees to inform the SICAV of any such incident and measures taken to address. This means that the fund manager can, in such cases, directly and on its own initiative take actions or measures, knowing that he is willing to take over the costs and that the SICAV can be informed afterwards. FDC considers such actions or measures as being part of the fund manager's standard due diligence process. Should the fund manager not be able to take any actions or measures himself or should any potential actions or measures that could be taken by the fund manager generate costs that the fund manager is not willing to take over, the SICAV should be informed beforehand with indication if any measures or actions could still be taken by the SICAV itself or highlighting these costs. The SICAV will then decide on a case-by-case basis if any steps are taken by the SICAV itself or if the SICAV agrees to take over the costs of potential actions or measures that could be taken by the fund manager. Thus and in any case, the fund manager should provide reasonable assistance to recover any amounts due or compensation if a counterparty fails to deliver.