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Policy on handling conflicts of interest

INTRODUCTION

Storebrand Asset Management AS is a management company licensed to manage securities funds pursuant to the Securities Trading Act. The company manages, among other things, the SKAGEN Funds.

In the management of the funds, the management company shall always act in the best interests of the securities funds and the clients. Nevertheless, situations may arise where the interests of the funds and the clients conflict with each other, or where conflicts of interest may arise between the employees of the management company and the securities funds. The objective of these guidelines is to identify potential conflicts of interest that may arise in the management company’s operations and to describe the measures that have been implemented to prevent or manage such potential conflicts of interest. The guidelines are intended to contribute to:

  • Ensuring that the way Storebrand Asset Management organizes and conducts all business activities is carried out in a manner that reduces potential conflicts of interest
  • Establishing adequate internal control measures to identify and manage potential conflicts of interest
  • Managing conflicts of interest in the best interests of clients

These guidelines are based on the “Guidelines for the Management of Conflicts of Interest in the Storebrand Group,” the “Procedure for the Management of Conflicts of Interest in Storebrand Asset Management AS,” Sections 2-20 to 2-23 of the Regulations relating to Securities Funds, and Section 10-9 of the Securities Trading Act.

STATEMENT OF GUIDELINES

Storebrand Asset Management shall conduct its business in accordance with the principle that conflicts of interest must be identified and managed in a prudent manner.

DEFINITIONS

Conflict of Interest

Conflicts of interest may arise between Storebrand Asset Management, the SKAGEN Funds, external funds, clients/unit holders, between different interests within the Storebrand Group, board members, and employees. It is important to be aware of conflicts of interest that may arise as a result of the integration of sustainability risk into the management company’s business operations, including conflicts of interest that may arise from a client’s sustainability preferences.

CONFLICTS OF INTEREST

Identification and Measures for the Management of Conflicts of Interest

Specific and potential conflicts of interest that may arise in connection with the management company’s operations, as well as the procedures and measures for managing these, are described below.

Potential Conflicts of Interest in the Management of Securities Funds

Storebrand Asset Management manages clients’ assets, and the company’s raison d’être is to deliver the best possible risk-adjusted return to clients. Storebrand Asset Management is a long-term manager and has no incentives to prioritize short-term gains over long-term, trust-based operations. Nevertheless, there is an inherent potential conflict of interest in the nature of the business, whereby individuals associated with the management company or the Storebrand Group may prioritize the company’s earnings over the long-term interests of the securities funds and unit holders.

To prevent such conflicts of interest from materializing, it is important to ensure independence in a number of functions, and the management company has implemented general measures to achieve this:

  • Procedures for the determination of fund prices (NAV), whereby dedicated employees who are independent of portfolio managers calculate fund prices. Pricing is also subject to controls performed by the company’s compliance function.
  • Each securities fund shall have a custodian. The custodian is a credit institution authorized to act as a custodian. The custodian shall, among other things, safeguard the fund’s assets or register them in accounts in a securities register. The custodian shall also perform several control functions, including verifying whether transactions in the funds are carried out in accordance with laws, regulations, and fund rules, and whether unit values are calculated in accordance with laws, regulations, and the fund’s articles of association.
  • Procedures to prevent insider trading and market manipulation in connection with the management of securities funds.
  • Guidelines and procedures for best execution to ensure that Storebrand Asset Management takes all reasonable steps to achieve the best possible result for unit holders.
  • Ethical guidelines intended to prevent employees of the management company from obtaining benefits at the expense of the company’s operations.

Potential Conflicts of Interest between Storebrand Asset Management and the SKAGEN Funds

Storebrand Asset Management will normally not trade in financial instruments, but may, in exceptional cases, make certain strategic investments in companies. Before the management company carries out such investments, the Chief Executive Officer shall demonstrate that the investments do not conflict with the company’s obligations under the Securities Funds Act or the Securities Trading Act, or otherwise conflict with the interests of the SKAGEN Funds.

Potential Conflicts of Interest between the Owner of Storebrand Asset Management and the SKAGEN Funds

The owner of Storebrand Asset Management may potentially have interests that differ from those of the securities funds in the conduct of the management company’s operations. The owner may influence Storebrand Asset Management’s operations through representation on the board. Potential conflicts of interest are managed by ensuring that unit holders are represented by a minimum of one-third of the board members of Storebrand Asset Management. The board members elected by the unit holders shall safeguard the interests of the unit holders.

Potential Conflicts of Interest between Employees of the Management Company and the SKAGEN Funds

Employees of Storebrand Asset Management may trade financial instruments for their own account. This may conflict with the interests of the funds, for example where both the fund and the employee seek to purchase the same security, or where the employee seeks to exploit knowledge that the fund intends to sell a security in order to acquire it at a discounted price.

To prevent employees from engaging in securities trading that may be assumed to conflict with the interests of the funds, exploiting information received for personal gain, or abusing their position to obtain special advantages, Storebrand Asset Management has established internal rules governing employees’ personal trading. These rules include, among other things, requirements for pre-clearance of purchases and sales of financial instruments, a prohibition on trading in the funds, holding periods, and restrictions on which intermediaries may be used.

Employees of Storebrand Asset Management may from time to time be offered gifts or other benefits from unit holders of the SKAGEN Funds, suppliers, or others providing services to the management company or the SKAGEN Funds. To prevent conflicts of interest between employees’ interests and the SKAGEN Funds, the company has established internal rules governing employees’ acceptance of gifts and/or other benefits.

Potential Conflicts of Interest between the SKAGEN Funds

To prevent conflicts of interest between the various SKAGEN Funds, the management company has established comprehensive procedures related to the management of securities funds. These procedures include, among other things:

  • Registration and logging of submitted orders and executed transactions
  • Where several funds are to buy or sell the same security, the trades shall be submitted to the executing investment firm simultaneously. If financial instruments are purchased for multiple portfolios and the order is not fully executed, the partial execution shall be allocated pro rata to each fund.
  • The management company may only, in exceptional cases, execute transactions between the funds.

Potential Conflicts of Interest between Different Roles/Functions within the Storebrand Group

The legal and functional organizational structure within the Storebrand Group may give rise to potential conflicts of interest. If such a situation arises, documented measures shall be implemented. All employees have specific job descriptions and reporting lines. In addition, internal agreements regulate which services the various groups/functions shall provide to which companies within the Storebrand Group.

Management of Conflicts of Interest

Storebrand Asset Management must ensure that clients’ interests and market integrity are safeguarded in the best possible manner.

In areas where conflicts of interest have been identified between clients, between clients and Storebrand Asset Management, between different companies and/or business areas within the group, or between different roles/functions, measures must be implemented to manage the most significant conflicts of interest in order to safeguard clients’ interests in the best possible way.

The compliance function of Storebrand Asset Management must ensure that management confirms that conflicts of interest are identified, assessed, documented, and managed adequately. Objective and documented criteria shall, to the greatest extent possible, be used in the management of conflicts of interest.

The company must regularly assess whether the management of the identified conflicts of interest is adequate. Management’s assessment shall be presented to the board at least annually.

 

Historical returns are no guarantee for future returns. Future returns will depend, inter alia, on market developments, the fund manager’s skills, the fund’s risk profile and management fees. The return may become negative as a result of negative price developments. There is risk associated with investing in funds due to market movements, currency developments, interest rate levels, economic, sector and company-specific conditions. The funds are denominated in NOK. Returns may increase or decrease as a result of currency fluctuations. Prior to making a subscription, we encourage you to read the fund's prospectus and key investor information document which contain further details about the fund's characteristics and costs. The information can be found on www.skagenfunds.com.