IBOSS Asset Management Limited (IAM) Stewardship Code

Overview

Asset owners and asset managers cannot delegate their responsibility and are accountable for effective stewardship. Stewardship activities include investment decision-making, monitoring assets and service providers, engaging with issuers and holding them to account on material issues, collaborating with others, and exercising rights and responsibilities. Capital is invested in a range of asset classes over which investors have different terms and investment periods, rights and levels of influence. IBOSS Asset Management Limited will use the resources, rights and influence available to it to exercise stewardship, no matter how capital is invested.

This guidance on the stewardship principles has been provided on the basis that Firm is a discretionary manager managing investments on behalf of professional clients.

We do not invest directly in equities.

Under Rule 2.2.3R of the FCA’s Conduct of Business Sourcebook, IAM is required to disclose the nature of its commitment to the UK Financial Reporting Council’s Stewardship Code (the “Code”) or, where it does not commit to the Code, its alternative investment strategy. IAM are not a signatory of the Code given the business model. Whilst not all principles of the code are directly relevant to the IAM business model, IAM seek to apply the principles where relevant in its day to day operations. As part of this we actively review the stewardship policies of the funds we use in our portfolios.

Stewardship is the responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries, leading to sustainable benefits for the economy, the environment and society

Environmental, particularly climate change and social factors, in addition to governance, have become material issues for investors to consider when making investment decisions and undertaking stewardship.

Our Stewardship Policy sets out IBOSS Asset Management Limited framework for ensuring that we are committed to providing effective Stewardship activities.

IBOSS Asset Management Limited, the Firm, is an Investment Manager.

IBOSS Asset Management Limited are the appointed Investment Manager of an OEIC, as well as providing a Discretionary Fund Management Model Portfolio Service (DFM MPS), known as the IBOSS Managed Portfolio Service.

As a Discretionary Fund Manager, we do not have voting rights in connection with any of the investments included in the discretionary proposition.

IBOSS Governance & Risk Management

Governance of the Risk Management framework is the ultimate responsibility of the Board of Directors, which performs the Governing Function of the Firm under the supervision of the ACD.  The Board of Directors is responsible for all aspects of the business, including setting the culture and ensuring that the Firm acts honestly, fairly, professionally and independently.

The Board of Directors will continually review the appropriateness and scalability of non-financial resources in line with the business’s development.

As an established and experienced business, the Board of Directors has the necessary understanding and information to manage resources and ensure they are appropriate for its requirements.

The Risk Management framework has been agreed upon by the Board of Directors and reviewed at least annually.

The Board of Directors will identify, measure, manage and monitor risks that the Firm and the ‘ ‘Firm’s investment schemes are exposed to.

The Board of Directors meet quarterly and is tasked with ensuring good Compliance and risk management.  We have a compliance monitoring plan that we operate to ensure all areas are regularly reviewed in order of priority.

Conflict of Interest

Under FCA’s Principle for Business, Principle 8 (Conflicts of interest), we are required to pay due regard to the interests of each client and to prevent or manage any conflicts of interest fairly, both between our Firm and our clients and between a client and another client. The specific rules for dealing with conflicts of interest can be found under the Senior Management Systems and Controls (SYSC) rules which can be found at SYSC 10.

We will take all appropriate steps to identify and prevent or manage conflicts of interest by:

  1. Identifying and preventing any potential circumstances which may give rise to conflicts of interest and which pose a risk of damage to clients’ interests;
  2. Establishing and maintaining appropriate mechanisms and systems to manage those conflicts; and
  3. Maintaining systems at all times in an effort to prevent actual damage to clients’ interests through the identified conflicts.

 

The Directors fully support this and are committed to ensuring that all conflicts between our Firm and our clients, and between clients, are managed fairly with no party disadvantaged.

At least on an annual basis, our senior management team will receive a written report providing details of the kinds of services or activities carried out by our Firm in which a conflict of interest entailing a risk of damage to the interest of one or more client has arisen or, in the case of ongoing service or activity, may arise.  This report will be within the Annual Compliance Report.

In addition to complying with the FCA requirements, we recognise that handling conflicts fairly is a fundamental element of good business practice and is required to assist in maintaining and developing our Firm’s business.

A copy of our policy is available upon request.

Business Beliefs & Investment Stewardship

We created the IBOSS proposition with the goal of providing fully diversified portfolios that have an emphasis on risk-adjusted returns for advisory clients irrespective of their personal wealth.

Co-operation with Advisory firms

We believe the relationship between a Financial Adviser and their client is fundamental in ensuring the client receives the best product and services to meet their financial goals and needs. Using A Discretionary Fund Manager will allow the Adviser to focus on ongoing suitability, with the peace of mind they have outsourced to IBOSS for our investment expertise. Therefore, at IBOSS Asset Management, we dedicate our time to supporting Advisory firms and do not market directly to retail clients. There are different Discretionary Fund Management (DFM) model portfolio services available; the financial Adviser will decide which is the most appropriate by carrying out their Due Diligence of the market and DFM MPS providers.  We will work closely with any Advisory firm that approaches us for information and ensure they are provided with all the necessary information required to make an informed decision.

A consistent approach to end-client servicing

Our experience indicates that the level of service offered to clients can vary depending on their personal wealth. Our proposition’s fundamental goal is to provide a consistent level of service and interaction irrespective of the client’s financial situation and following the advice process. From an interaction perspective, this includes quarterly touchpoints, portfolio changes, and market updates. A consistent and diversified investment process supports this communication.

A diversified and risk-conscious approach to investing

We have always approached investments with the belief that the journey is of equal importance to the overall outcome. The IBOSS investment team’s unofficial goal is “to beat the relevant benchmark over as many periods as possible with less than benchmark volatility, lower drawdowns, and across risk ratings”. The company’s close links with numerous advisory firms has instilled the importance of risk as well as returns for a client. It is crucial that advisers feel comfortable recommending IBOSS throughout the market cycle and across a broad range of client risk tolerances. As such, the team aims to provide consistent returns relative to the benchmark through relatively high diversification levels. More information re investment philosophy & construction is available upon request.

Environmental Social and Governance Stewardship

The goal of the broader MPS range remains financial. We understand each funds approach to ESG but rarely make decisions solely due to these factors. Our emphasis on diversification does mean that we would expect to hold a portion of assets in stocks deemed less ESG compliant. Our experience shows that many funds with positive ESG factors have exhibited Growth-like characteristics and limiting the investing universe to incorporate these factors comes with additional concentration considerations.

Our ESG stewardship position within the sustainable range is much more targeted where we look to evidence and ensure that the portfolios’ net positions exhibit above-average ESG characteristics according to a blend of the Morningstar Sustainability ratings and our qualitative research.  We also endeavour to provide positioning information regarding more emotive investment areas, Alcohol armaments etc. This data is collated using a third-party system alongside correspondence with the relevant fund manager.

Engagement & Escalation of Stewardship

Though IBOSS cannot engage on an individual securities basis due to holding collectives, we look to influence funds and platforms to improve service standards or investor outcomes. We have included some examples below:

Platform

We actively engage with various platforms to ensure that they continually update the range of funds available. This engagement includes the introduction of new funds and fund houses. We feel this interaction is vital as a platform’s potential range of funds should increase to reflect industry trends and developments. Additionally, we continue assessing the business case for introducing the IBOSS service onto a wider range of platforms. Each is considered on its own merits.

Fund Pricing

Price has understandably become increasingly crucial for clients, advisers, and investors. We believe that economies of scale and technological improvements should be reflected in the cost of the collectives we hold and passed to the advisor/ client. Our investment team dedicate considerable resources negotiating with fund houses to provide, where possible, more competitive pricing.

Fund manager interaction

The team’s ability to access the managers directly allows them to query fund position, performance, or, for example, ESG factors. The outcome is less structured, but this interaction does give the team the ability to engage with the manager and highlight areas of concern to the manager buying the individual securities. For example, the team often queries managers on flows into their fund and expresses concern if a fund is attracting or losing FUM at an increased rate.

IBOSS Open-Ended Funds Stewardship Policy

In addition to our standard Stewardship goals Margetts, who are the ACD for our open-ended range, have a Stewardship policy; and review us on an annual basis.  This review will include assessing whether the manager’s Stewardship Policy is sufficiently robust and complies with the FCA requirements. If any conflicts arise, these are managed to ensure the fund’s interests are placed ahead of the manager.

Margetts is an independent specialist fund management firm with more than £2bn of assets under management. Margetts Fund Management Ltd was established in 2000; however, the Firm’s ancestry has enjoyed a long and rich history which can be traced back to 1845.