Questionnaire
Global Investment Grade Corporates
External management program
1. Company details
1.1 Provide a name, address, telephone, fax of your organization.
1.2 Provide the contact details of main contact persons in your organization.
1.3 Current ownership and capital structure
1.4 The relationship between the organisation and its parent and subsidiaries/affiliates.
1.5 Credit rating from major rating agencies (S&P, Moody’s, Fitch). Changes in credit rating during the last five years. If it is applicable provide the same information for the parent organization as well.
2. Product, fund and client details
2.1 Please provide a brief description of the different products you are offering. What is your experience in Global Investment Grade Corporates? How long are you working with Global Investment Grade Corporates as a separate investment portfolio?
2.2 Please fill in the following table as of the end of December 2015 according to the relevant benchmark. Please note that we are asking for your aggregate portfolio value in the last line, and a number of accounts elsewhere. Please also provide information for Global Investment Grade Corporates exclusively, if it is possible.
Portfolio size(USD million) / Global Fixed Income / Global Investment Grade Corp / US Corp / EU Corp / Asian Corp / Other
0-50
50-100
100-200
200-500
>500
Total
amount
2.3 Clients’ assets under your management AUM for last 5 years (total AUM, AUM in Global Investment Grade Corporates, institutional AUM and central banks AUM).
2.4 Who do you consider to be your 5 main competitors for this type of mandate (Global Investment Grade Corporates)?
2.5 Please supply us with the names and contact details (where possible) of your institutional clients who have Global Corporates mandate with you (for our reference).
3. Professional staff
3.1. Please provide an organisation chart for the units involved in the Global Corporates product.
3.2. Please provide curriculum vitae for professional staff with at least 80% of their time allocated to the particular investment product you suggest for this mandate. This question has high importance, therefore we expect a comprehensive and complete answer. Please include:
· name and location;
· primary roles (business leader / investment manager / researcher / trader / client service);
· other roles (please indicate approximate percentage of time spent on other activities);
· years in industry;
· years in firm;
· years of concentration on Global Corporates;
· their background (academic and professional career).
3.3. The individuals who would have specific responsibility for this account (portfolio management and client service).
3.4. Staff turnover: please specify the number of departures and additions during each year from the beginning of 2011 within team responsible for investment management. In addition please provide the total number of employees involved in investment management for the latest available date.
4. Investment process and philosophy
4.1. What is your particular value adding philosophy?
4.2. What inefficiencies in the capital market are you trying to exploit (market segmentation, regulatory constraints, psychological biases, lagged market reaction, market overreaction etc.)?
4.3. Is the efficiency of your investment approach dependent on a long time perspective? Please explain.
4.4. Please describe in details the investment management process (portfolio construction process), utilized portfolio management approach, valuation models, sources of information for a Global Corporates fund.
4.5. What do you consider to be the key active decisions required in managing an active portfolio? How do you manage and monitor active risk positions?
4.6. How risk control is integrated with your on-going portfolio management (please also specify any models and systems used)? In addition to managers’ own risk controls, what other independent risk reporting lines exist?
4.7. What kind of systems and software do you use in your performance calculations and risk management for accounting and analytical reports?
4.8. What is your procedures for settlements and communications with the custodian(-s)?
4.9. Please provide performance details for a Global Investment Grade Corporates composite and details on the construction of composites. Please show the details separately for each year.
CompositeBenchmark: The BofA Merrill Lynch 1-5 Yrs Global Corporate Index (GVBC or Q847)*
2015 / 2014 / 2013 / 2012 / 2011
Benchmark return
Composite return
Composite excess performance
Composite market value
Information ratio
Tracking error
Avg. turnover
*in case of absence of such mandate or track record against this particular index, please indicate data for the closest benchmark
CompositeBenchmark: Barclays Capital Global Aggregate Corporates Index 1-5 Yrs
2015 / 2014 / 2013 / 2012 / 2011
Benchmark return
Composite return
Composite excess performance
Composite market value
Information ratio
Tracking error
Avg. turnover
5. Fee structure
5.1. Please indicate the management fee schedule for the management of the portfolio according to the following table (provide an example for portfolio size of 300 mln.):
Amount mln. in USD / Fixed fee / OR / Amount mln. in USD / Incremental fee0-100 / 0-100
100-200 / 100-200
200-300 / 200-300
Above 300 / Above 300
In case if you have a performance fee, please indicate it.
5.2. What other expenses are incurred other than fees?
5.3. Do you use a “net new high basis since inception” method? Will you be willing to accept this method with this mandate? Will you be able to accept minimum level, not less than base fee, of excess return (Hurdle Rate) for performance calculation purpose?[1]
6. Compliance
6.1. Please provide latest available audited financial statements for asset management and/or parent/holding company.
6.2. Please provide a description of your internal ethical guidelines.
6.3. Please provide the company internal policies and procedures, which aim to minimize risks of wilful default and conflict of interests, including fair distribution of trades among clients’ portfolios, checked list and approval procedure of brokers, agents and counterparties.
7. Legal issues
7.1. What kind of insurance do you have that protects the investment account and indemnifies the customer for managers' errors and omissions?
7.2. What level of insurance do you have against employee fraud and/or negligence?
7.3. [2]National Bank of Kazakhstan may need a guarantee to be signed by the manager's designated parent company. This guarantee specifies, that the guarantor agrees to compensate National Bank of Kazakhstan for any losses arising from the failure of the manager to fulfil its obligations under the investment management agreement (to the extent that the manager is liable for the aforesaid under the management agreement). Would your parent company accept this principle? If answer is No, is it possible to sign the Investment management agreement with your parent company or tri-party agreement?
7.4. The manager is liable for any losses arising from the breaching of the investment management agreement by the manager. Would your company accept this principle?
8. Other issues
8.1. National Bank of Kazakhstan is currently developing its own investment process. We aim to benefit from the external managers in order to improve our internal investments. The managers may be used as an advisor on model building, risk management, technology, systems and other issues related to global corporates. We would also appreciate the opportunity to use the manager to train our own staff. Training: we request to provide an annual one-week training session at manager’s site for 2 representatives of the NBK at manager’s expense (airfare, accommodation, meals). Please give us a clear answer on this matter.
8.2. National Bank of Kazakhstan will impose strict requirements regarding reconciliation between the manager and the global custodian and reporting to NBK. Requirements that will be imposed include:
· Transaction data must be supplied to the global custodian and NBK on trade date on a continuous basis.
· An on-line or overnight-batch electronic transfer of all transaction details to NBK must be in place.
· By the close of the 3rd business day following month-end, the manager will receive from the custodian a full report of the custodian’s month end holdings and valuations. By the 6th business day following month-end the manager will be required to provide the custodian with a fully audited report including the following: a full cash reconciliation, a reconciliation detailing payables and receivables, an asset reconciliation detailing holding or valuation discrepancies and an income and expense reconciliation. A reconciled report must be delivered to NBK by the close of the 10th business day following month-end.
8.3. Please answer “Yes” to indicate your agreement to include the following Mandatory clauses in the Investment management agreement:
1) The National Bank of Kazakhstan may terminate an Agreement at any time without any prior notices or explanations.
2) The National Bank of Kazakhstan may add and/or withdraw a part of the assets in external management at its own discretion.
3) The Agreement must be signed in Russian and Kazakh languages and in a language agreed by the parties.
4) The manager must inform NBK on movement of its personnel responsible for the direct management of NBK’s assets.
5) NBK’s employees and independent auditors should be able to visit the manager for the purposes of checking account operations and to obtain more detailed and exact information about the manager, it’s investment decision making process and risk-management procedures.
6) Affiliated or related parties with the manager shall not be used as brokers for the transactions with the NBK’s assets in external management.
7) The manager is liable for any losses arising from the failure of the manager to keep the expected tracking error within agreed limits.
8) The manager agrees to provide consultations and training services to NBK’s employees responsible for reserves management.
9) In the event of the Agreement termination, the manager must provide a fully reconciled with the Custodian portfolio report as of the termination date. All expected expenses related to the portfolio for the external management period should be set with the agreement of parties.
10) The manager must provide NBK with the following reports on a regular basis.
On a daily basis:
Daily transaction and positions (end day portfolio composition, market value of the portfolio) reports for the previous business day.
On a monthly basis:
Portfolio valuation (portfolio asset allocation, portfolio currency allocation, end of month portfolio composition, market value of the portfolio as at month’s end);
Portfolio performance analysis (total return portfolio reports with performance attribution, risk decomposition and tracking error analysis).
On a quarterly basis:
Portfolio flows (list of all transactions made during quarter, sorted by asset classes, currencies, maturities, dividends paid and accrued interest);
Portfolio performance analysis (total return portfolio reports with performance attribution, risk decomposition and tracking error analysis);
Markets overview report and the impact to the portfolio performance;
Economy review report;
Strategy overview and change in portfolio structure review;
Current investment strategy;
Quarterly performance attribution report;
On a yearly basis:
Annual performance attribution report;
11) On a monthly basis and/or at the end of transition period the manager carries out the reconciliation of the portfolio composition with the custodian’s data within an agreed time.
12) Amendments to the Agreement are made with a written consent of both parties.
13) The manager shall provide the Custodian with transactions information on the day of the transaction after receiving the broker’s trade confirmation.
14) The manager shall disclose procedures to the National Bank of Kazakhstan related to brokers, agents and counterparties approval.
15) The manager shall provide the National Bank of Kazakhstan with its best execution policy relating to the equal execution of orders among clients and decisions to deal on behalf of clients, avoiding of risks on conflict of interest as required by Regulations.
16) The manager shall provide yearly portfolio review meetings with NBK’s employees responsible for reserves management. Portfolio review shall include performance analysis report, investment guidance compliance report, market conditions report and its impact on the portfolio and investment strategy.
[1] Acceptance of the clause will have positive impact on RFP assessment
[2] For organizations who have a parent company