The information contained on this website is not intended to make any offer, inducement, invitation or commitment to purchase, subscribe to, provide or sell any securities, service or product or to provide any recommendations on which visitors to this site should rely for financial, securities, investment or other advice or to take any decision. Visitors to this site are encouraged to seek individual advice from their personal, financial, legal and other advisers before making any investment or financial decisions or purchasing any financial, securities or investment related service or product.
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You should acknowledge that the value of investments, and the income and other returns from investments, may go down as well as up, and is not guaranteed. Investors may not get back in full the amount of money invested. Past performance cannot be relied on as a guide to future performance. Exchange rate changes may cause the value of overseas investments or investments denominated in different currencies to rise or fall.
The risk considerations in the previous paragraphs does not represent and exhaustive list of all the risks of an investment in any fund or investment proposition managed by CSLLP (or any other member of the CSLLP group). Investors should take advice from their own independent, professional financial advisers before making any investment decision and are responsible for ascertaining any income tax or other tax consequences which may affect their acquisition of any investment.
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Units or any other investment instrument in any fund or investment proposition managed by CSLLP (or any other member of the CSLLP group) have not been and will not be registered under the US Securities Act of 1933 for offer or sale and such units or instruments public have not been and will not be registered under the US Investment Company Act of 1940. No offer to sell securities in the USA or elsewhere is made, nor is an offer to purchase securities solicited, by this website.
This website is only available to persons who do not fall within the definition a “U.S. Person” within Regulation S.
Units or any other investment instrument in any fund or investment proposition managed by CSLLP (or any other member of the CSLLP group) are not registered for sale in Australia, Canada, Hong Kong or Singapore.
As a general rule, the Units or any other investment instrument in any fund or investment proposition managed by CSLLP (or any other member of the CSLLP group) may not be sold, offered or delivered in any other countries without registration. The information contained on this website is therefore not directed at specific persons, but to readers generally interested in the Craigmore group.
Access to the information contained within this website may be restricted by laws and regulations applicable to the user. The information in this website does not constitute either an offer to sell or a solicitation or an offer to buy in a country in which this type of offer or solicitation is unlawful, or in which a person making such an offer or solicitation does not hold the necessary authorisation to do so, or at all. Accordingly, persons accessing the information on this website are responsible for ascertaining the legal requirements which would affect their acquisition of any investment, including any foreign exchange control requirements.
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The website may include information related to unregulated collective investment schemes that may not be marketed to the retail public.
The parts of the website relating to unregulated collective investment schemes are directed only at persons who (1) are authorised under the UK Financial Services and Markets Act 2000 or are otherwise “Investment Professionals” within the meaning of Article 14(5) of the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001, (2) who are otherwise categorised as eligible counterparties or professional clients for the purpose of Section 4 of the Conduct of Business Sourcebook of the Financial Conduct Authority’s Handbook of Rules and Guidance (”permitted recipients”) or (3) are persons outside the United Kingdom (all such persons together being referred to as “relevant persons”).
The sections of the website relating to unregulated collective investment schemes are not designed for, and the services of CSLLP relating to unregulated collective investment schemes are not available to, persons of any other description and such persons should not rely on any information contained within these sections of the website. Should you be in any doubt about your status, you should not access these sections of the website and should consult an independent financial adviser who specialises in providing advice on participation in unregulated collective investment schemes.
Pillar 3 Disclosure – 31 March 2019
Craigmore Sustainables LLP (the Firm) was originally authorised and regulated by the Financial Services Authority, the predecessor regulator to the Financial Conduct Authority (FCA) on 16 May 2011. On 6 January 2015, the Firm received regulatory approval for a variation in its regulatory permissions, as a result of which it became a full scope Alternative Investment Fund Manager (AIFM) pursuant to the provisions of the AIFM Directive (AIFMD). The Firm additionally holds certain regulatory permissions for designated investment business arising under the Markets in Financial Instruments Directive (MiFID) limited to activities of a ‘BIPRU firm’.
The Firm’s business model is principally the discretionary investment management of sustainable primary asset portfolios held in funds, seeking long-term total returns for our target client base of professional and institutional investors within those funds.
The Firm is categorised as a Collective Portfolio Management Investment Firm (CPMI) and is subject to the capital requirements set out in the Interim Prudential Sourcebook (IPRU-INV) Chapter 11, the Prudential Sourcebook for Banks, Building Societies and Investment Firms (BIPRU) and the General Prudential Sourcebook (GENPRU) of the FCA Handbook. The Firm is not a MIFID Investment Firm, as defined by the FCA Handbook. In accordance with BIPRU, the Firm is required to carry out an Internal Capital Adequacy Assessment Process (ICAAP).
The Firm is not a member of a group for prudential purposes; hence capital requirements apply solely on a ‘solo’ basis to the Firm.
The regulatory capital framework applicable to the Firm is based upon three pillars:
• Pillar 1 sets out the minimum (variable) capital requirement that meets the Firm’s credit, market and operational risk;
• Pillar 2 requires the Firm to assess whether additional capital, beyond Pillar 1 capital requirements, is appropriate in order to meet additional business risks or whether additional controls to mitigate such risks should be implemented; and
• Pillar 3 requires disclosure of specified information about the underlying risk management controls and capital position.
The Firm is permitted to omit required disclosures from these Pillar 3 disclosures if it believes that the information is immaterial such that omission would be unlikely to change or influence the decision of a reader relying on that information for the purpose of making economic decisions about the Firm. Further, the nature of the Firm’s business model and current standing is that of a small firm whose activities are not complex and primarily not credit-related.
In addition, the Firm may omit required disclosures where it believes that the information is regarded as proprietary or confidential. In the Firm’s view, proprietary information is that which, if it were shared, would undermine its competitive position. Information is considered to be confidential where there are obligations binding us to confidentiality with our customers, suppliers and counterparties.
In light of the above, the Firm has omitted certain data on the grounds of proportionality and/or materiality.
Risk Management Objectives
The Firm is governed by its partners who determine its business strategy and risk appetite. The Partners are also responsible for establishing and maintaining the Firm’s governance arrangements along with designing and implementing a risk management framework that recognises the risks that the business faces.
The partners also determine how the risks the business faces may be mitigated and assess, on an ongoing basis, the arrangements put in place to manage those risks. They meet on a regular basis and discuss current projections for profitability, cash flow, regulatory capital management, business planning and risk management. They manage the Firm’s risks having regard to relevant laws, standards, principles and rules (including principles and regulations set by the FCA) with the aim to operate a defined and transparent risk management framework. These policies and procedures are updated as required.
The partners of the Firm place a high priority on a strong risk management culture. The partners recognise that risk is inherent to their business and the market in which they operate. The Firm has a low risk appetite in respect of the risks highlighted above and this is reflected in its governance and controls. There is an experienced management team of proven ability to ensure that the business remains tightly controlled within the standards that the Firm aspires to.
The partners have identified that investment, credit, market and operational risks are the main areas of risk to which the Firm is exposed. Periodically the senior management of the Firm formally review risks, controls and other risk mitigation arrangements and assess their effectiveness. Where the Firm’s senior management identify material risks they consider the financial impact of these risks as part of its business planning and capital management and conclude whether the amount of regulatory capital held is adequate.
Poor investment performance in the funds that the Firm manage (along with missed investment opportunities due to failed marketing efforts to increase overall levels of funds under management by the Firm) could result in low or reduced management fees and other remuneration earned by the Firm. This is a fundamental risk to the Firm’s business which is actively managed by:
The Firm does not hold client money and as a result has no obligation to pay its clients. In addition, the likelihood of a default in receiving our management fees and other fund management remuneration is considered to be very low. Even though the Firm does not consider credit risk as having a material adverse effect on the Firm’s business, mitigation steps include the funds managed by the Firm (on behalf of the fund entities) getting approval from the fund entities’ directors before any material decisions are made, with cash transactions executed where applicable with highly rated counterparties (the Firm’s banking arrangements are with the HSBC group, a AA-/Aa2 rated banking organization listed on the London Stock Exchange).
The Firm does not undertake any proprietary trading; hence exposure to market risk is limited to the movement in foreign exchange rates which affects the value of investment management fees (receivable in NZ dollars) and other fund management remuneration due from the fund entities either paid or based in a currency other than sterling. In addition, most of the Firm’s liquid funds are held in sterling or converted into sterling over a very short timeframe (less than 3 months). In light of the foregoing, market risk is not considered to be a material risk.
The Firm’s operational risk framework aims to identify key operational risks, together with the probability of the risks occurring and the impact to be had if each risk event were to occur. Consideration is then given to the controls in place to mitigate these risks. The aim is for a continual reviewing and upgrading of internal controls and procedures as a result of the framework’s implementation.
Capital Resources Disclosure
Pillar 2 Requirements
The Firm has assessed the adequacy of its internal capital required to support the Firm’s current and future activities through its undertaking of the ICAAP and, as such, have reviewed a detailed risk assessment of the Firm’s business and risk environment. The ICAAP is founded upon the existing operational risk framework however additional items such as business risks, articulation of risk appetite, scenario analysis and stress testing of key risks were included where deemed appropriate.
Through analysis and discussions with the partners of the Firm as part of the ICAAP process, it was determined that Pillar 1 capital is sufficient to manage the business given the Firm’s risk appetite and the levels of risk within the business. Therefore, it has been concluded that (i) the Firm will continue to maintain its capital position equal to or greater than the sum of its a Fixed Overhead Requirement (FOR) and Professional Indemnity Insurance Capital Requirement (PII CR); and (ii) the Firm is currently sufficiently capitalised for the risks to which it is exposed.
The Firm has determined that at 31 March 2019, its total capital requirement under Pillar 1 was equal to £239k, being the sum of a FOR of £229k and a PII CR of £10k, and that its Pillar 2 assessment did not require any incremental capital over this amount.
As at 31 March 2019, the Firm recorded capital resources of £674k, representing a surplus of 281% over the aggregate requirement of £229k.
Pillar 3 Remuneration disclosures
Remuneration Code staff
The Firm has identified its Remuneration Code staff as required by SYSC 19A.3.5 (1). Remuneration Code staff include all directors of the following groups to the extent that they do not fall below the relevant de minimis limits established by the FCA:
i. senior management;
iii. staff engaged in control functions; and
iv. a residual category including all staff receiving total remuneration that takes them into the same remuneration bracket as senior management and risk takers, whose professional activities have a material impact on the risk profile.
During the year ended 31 March 2019 there were four (2018: four) code staff at the Firm.
Aggregate remuneration of Remuneration Code staff
In the case of the Firm, there is significant overlap between the above types of Remuneration Code Staff. Where an individual is part of the senior management of the Firm and also falls within one or more of the other Remuneration Code Staff categories set out above, information regarding their remuneration has been disclosed below under the ‘senior management’ heading.
Total remuneration of Code staff at the Firm for the year ended 31 March 2019 was £341,260 (2017: £279,986) of which all related to senior management.
Remuneration policy and responsibility for determining remuneration policy
The Firm has established a management committee which has determined a remuneration policy which:
• covers all of its Remuneration Code staff;
• requires for all staff, including but not limited to Remuneration Code staff, that the structure of remuneration within the Firm is consistent with and promotes effective risk management;
• establishes that performance-related pay of Remuneration Code staff is based upon a performance assessment process and requires that non-financial performance metrics should form a significant part of this process;
• prohibits the award, payment or provision of guaranteed bonuses to Remuneration Code staff unless it is in the first year of service and is exceptional;
• prohibits severance payments related to early termination of Remuneration Code staff from being used to reward failure; and
• is proportionate to its business and, specifically, takes into account the specific features of the activities of the Firm when adhering to Principle 8 of the Remuneration Code in relation to profit-based measurement and risk adjustment and Principle 12 in relation to remuneration structures in relation to multi-year frameworks.
The Firm has not formed a Remuneration Committee.