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Questions & Answers

General questions

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: Does the FDC consider a performance-fee based scheme for any Lot? 

A: No, a performance fee structure is not an option for the FDC for any Lot.

Q: Is the maximum tracking error associated to each Lot a hard cap/limit?

A: The FDC expects that the tracking error will stay in the given range on an ex post basis. Investment managers will not be liable for a breach of the limit (the limit is a target/objective), but a consistent and on-going breach of the tracking error objective might be considered by the FDC as a reason to terminate a mandate.

Q: Does the FDC have any preference for a concentrated vs. a well-diversified portfolio?

A: In a general way, the fund manager is free to set up the portfolio within FDC's guidelines and restrictions stated in the consultation documents. However, it is reminded that the respective sub-fund related to Lot 2 should be invested in at least 50 eligible assets issued by different issuers.

Q: Does the FDC have a preference for a fundamental vs. a quantitative approach?  

A: In a general way, the fund manager is free to define his investment approach/strategy within FDC's investment guidelines and restrictions stated in the consultation documents.

Q: Can a tendering company propose multiple strategies?

A: Each tendering company should decide which of its strategies best suits the investment objective and guidelines of the FDC and that given strategy should be used in the current request for proposals. One single proposal can not include several strategies.

Q: For Lot 2 only: does the FDC consider engagement (at company level) as a selection criteria? 

A: Engagement (at company level) is not considered as a specific selection criteria by the FDC?

Q: For Lot 3 only: the indicated benchmark is the Bloomberg Barclays MSCI Euro Green Bond Total Return Index excluding securitised assets expressed in EUR. An "ex securitised" index does currently not exist. Has the FDC already created a customised index or is the tendering company requested to create the customised index?

A: Please note that no "ex securitised" customised benchmark has or will be created by the FDC. There is a preference for the FDC that the fund manager creates the given benchmark but as an alternative FDC would accept to base the mandate on the mentioned and existing Bloomberg Barclays MSCI Euro Green Bond Total Return Index expressed in EUR where the fund manager simply excludes from its allowed investment universe all securities flagged and classified by the benchmark provider as securitised assets (being all forms of Mortgage-Backed Securities (MBS), Asset-Backed Securities (ABS), Commercial Mortgage-Backed Securities (CMBS) as well as covered bonds and Collateralized Debt Obligations (CDO)).

Questions about the Questionnaires 

Q: Questions 5.29 b) and c) of the Word questionnaire are in relation to Lot 2 but contain a reference to question 5.17 related to Lot 1. Is this correct? 

A: Indeed, this is an error. Both questions should not refer to question 5.17 but to question 5.28 and should therefore be read as follows: 

  • b) Are you able to measure the impact of your sustainable impact approach on all criteria considered in your approach (i.e., for all criteria in question 5.28 your answer was "Yes")? 
  • c) Are you able to show the impact of your sustainable impact approach on all criteria considered in your approach (i.e., for all criteria in question 5.28 your answer was "Yes") in a sustainable impact reporting?

Q: With regard to question 3.4 of the Word questionnaire and Lot 3, would it be acceptable to include the green bond portion managed throughout other mandates or dedicated funds?

A: No, for Lot 3 question 3.4 explicitly asks for green bond mandates so please only indicate such mandates. In a general way, "carve outs" are not accepted with regard to question 3.4.

Q: With regard to the performance track record, are there any minimum requirements? Furthermore, would FDC accept a carve-out of an existing strategy holding a certain percentage (< 20%) of off-benchmark positions?

A: Please note that FDC would accept such a track record knowing that each tendering company should decide which track record is the most representative for the Lot for which a proposal is submitted. In a general way and as mentioned in the Word questionnaire, a composite corresponding exactly to the offered investment strategy or, if not available, a composite which is as representative as possible should be indicated, this for the last 5 years and since inception. If the track record is shorter than 5 years, please complete only since inception. Furthermore, if a track record deviates from the guidelines (for example by including off-benchmark positions), please state this clearly in the questionnaire and state the performance impact of any investments not in line with guidelines of the respective Lot.

Q: With regard to the "Fee" sheet in the Excel questionnaire, what type of pricing structure is the FDC expecting?

A: The tendering company should indicate their management fees should it be entrusted with:

  • a mandate of a size of 80 million EUR;
  • a mandate of a size of 100 million EUR; and
  • a mandate of a size of 120 million EUR. 

For each size, the tendering company is free to suggest either a flat fee or a scaled fee structure. In case of a scaled fee structure, the effective fee for each given volume should be calculated. 

Q: With regard to question 5.11 i) of the Word questionnaire, could FDC please confirm what is meant by "scaling of the tracking error"?

A: The tendering company should state whether it is able to adopt its investment strategy to different tracking error targets (if it normally (unconstrained) runs a strategy with a tracking error of 5% but a client would like a tracking error target of 2%, would it be able to adopt (scale) its strategy to meet the client's needs)?

Questions about the Issue Document 

Q: Can you please confirm if Lot 1, Lot 2 and Lot 3 correspond specifically to any of the sub-funds listed in the Issue Document?

A: Lot 1 corresponds to sub-fund "FDC SICAV Global Equities - Active 1" (Supplement 21.1), Lot 2 to sub-fund "FDC SICAV Global Equities Sustainable Impact -Active 1" (Supplement 21.6) and Lot 3 to sub-fund "FDC SICAV EUR Green Bonds - Active 1" (Supplement 22.5).

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

A: No, off-benchmark securities are not allowed for any Lot.

Q: With regard to Lot 3, the draft Issue Document mentions that securitized assets (as defined in the glossary) and hybrid securities, such as convertible bonds or bonds with warrants, are not authorized. Could you please confirm that callable bonds and subordinated bonds issued by corporates are part of the authorized investment universe?

A: As long as they are included in the benchmark of Lot 3, FDC considers callable bonds as well as subordinated bonds issued by corporates (and/or preferred securities) as eligible securities.

Q: With regard to Lot 2, can you please confirm if there are additional exclusion criteria that those mentioned in the Issue Document? 

A: No, there are no other exclusions (knowing that FDC's exclusion list will also apply to the given Lot).

Q: With regard to Lot 3, we assume that following restrictions on derivatives will apply: the Portfolio may invest in derivative financial instruments traded on a Regulated Market whose underlying assets consists of one or more Eligible Assets and OTC derivatives (swap contracts) in order to manage "duration". However, could we invest in German government bond futures, in order to manage EUR duration, even if the benchmark does not include German government bonds?

A: Please note that the draft Issue Document sent along with the tender documents and Supplement 22.5 specifically refering to Lot 3 mentions indeed that the Portfolio may invest in derivative financial instruments traded on a Regulated Market whose underlying assets consists of one or more Eligible Assets. However, in order to manage the EUR duration, the portfolio manager may for example invest in German government bond futures as long as the portfolio contains bonds ("the underlying") that show a high correlation with german government bonds (e.g. bonds of AAA-rated issuers). To clarify this, it should be noted that FDC will amend the Issue Document accordingly after the request for proposals and prior its submission to the CSSF.