Report &
Policies

LIOR has designed and implemented a risk management policy in line with applicable regulations for the funds it manages. The terms of the policy are reviewed annually by the board of directors.

1. Risk and Compliance Department

The monitoring of risks falls under the responsibility of the Head of Risk and Compliance, who acts as risk controller, compliance officer and Money Laundering Reporting Officer. He is assisted by the SICAV’s Management Company in Luxembourg, the outsourced operations department and external advisers. LIOR benefits from a proprietary risk monitoring platform, complemented by Bloomberg risk functionalities.

• Portfolio management level: fund managers monitor risks ex-ante and ex-post using LIOR’s portfolio monitoring tools.
• Middle office and control level: internal constraints are built on top of prospectus and regulatory constraints, checked in real time, with a specific focus on the VaR budget.
• Management Company level: LEMANIK monitors LIOR’s portfolios and risk model against its own, with independent controls performed on both sides.

2. Internal monitoring system

LIOR uses a proprietary risk monitoring tool to follow all portfolio positions on a quasi real time basis, to manage risks and constraints, and to check the impact of any investment decision on the portfolio structure and its compliance with portfolio restrictions.

3. The Risk Control function

The Risk Control Function acts as an independent second level of control, providing top management with an independent view of risk across the funds and supporting mitigation efforts. It defines or validates investment risk methodologies and models, issues valuation standards and oversees valuation processes.

4. Main risk limits

As an absolute return fund, LIOR GP, Alpha Fund abides by a regulatory constraint defined in its current prospectus: an ex-ante VaR (99%, monthly) of 10%.

5. Risk escalation, stress testing and liquidity

Rather than managing positions with stop losses, the team manages risk at portfolio and strategy VaR level with internal pre-set action levels. In most cases the portfolio VaR remains contained below 70% of its regulatory limit. Stress tests based on market risk and historical shocks are run with the front office risk monitoring tool. Portfolios focus on very liquid instruments, including in stressed conditions, to minimise the impact of large redemptions.

1. Object

LIOR GP is in charge of share class hedging. The Hedging Policy defines the procedure followed for the hedge calculation and hedge execution.

2. Key principles

• Hedging is usually performed by executing an FX swap.
• The FX forward leg has a maturity of the last business day of the month, with a maximum of one month. Longer maturities require the express consent of the Investment Manager.
• The FX spot leg offsets the cash flows in non-reference currency generated by subscriptions and redemptions.

3. Daily controls

A daily control of the calculated hedging ratio confirms that the share class and Sub-Fund remain within the hedging range of 95% to 105%. Outside this range, a hedging adjustment is performed by executing an FX forward to bring the ratio back to approximately 100%.

LIOR GLOBAL PARTNERS has designed and implemented a remuneration policy in line with applicable regulations. The policy remains under regular review and is updated as required to ensure compliance with applicable legal and regulatory obligations.

LIOR is committed to aligning the interests of its clients, employees and directors with a view to delivering performance within a strict risk framework. It avoids remuneration schemes that could generate excessive risks and retains the capacity to reduce bonuses materially if significant losses are incurred during a financial year.

• Integrates full-year financial results and the achievement of strategic and operating objectives.
• Promotes and is consistent with sound and effective risk management of the UCITS funds it manages.
• Does not encourage risk-taking inconsistent with the risk profiles or the rules governing the UCITS funds.
• Does not impair LIOR’s ability to act in the best interest of the funds and their investors.

Remuneration committee and identified staff

The Board of Directors has established a Remuneration Committee to oversee remuneration arrangements and exercise competent judgment on remuneration policies applicable to identified staff, in line with the UCITS Directive and ESMA guidelines. The list of identified staff, including senior management, risk takers and control functions, is reviewed annually.

Remuneration principles

Remuneration consists of a fixed component, providing a competitive base salary consistent with responsibilities and the relevant labour market, and a variable incentive component linked to the company’s business results and individual performance. For identified staff, part of the variable compensation is deferred over three years, as required under the UCITS Directive.

Employees must not use personal hedging strategies which could undermine the risk alignment effects embedded in their remuneration arrangements.

LIOR GLOBAL PARTNERS has designed and implemented a conflicts of interest policy in line with applicable regulations, under regular review.

1. Introduction

LIOR is an asset manager providing its clients with all forms of placements and investment services. As a result, like any financial services group, it may have conflicts of interest when considering engagement and voting matters. The protection of client interests is of primary concern, and the policy sets out how LIOR identifies circumstances which may give rise to conflicts and maintains appropriate mechanisms to manage them fairly.

2. Situations identified

• LIOR provides a service to a client and may have a material interest, relationship or arrangement in the transaction, product or service.
• LIOR acts for a given client and for another client whose interests materially conflict.
• Conflicts relating to proxy voting and engagement carried out on behalf of different clients.
• Own account conflicts, including directorships held by employees and personal account dealing.

3. Management of conflicts

LIOR seeks to avoid conflicts of interest and, where they cannot be avoided, applies policies and procedures aiming at identifying, managing, monitoring and, where appropriate, disclosing such conflicts, so as to prevent them from adversely affecting the interests of the funds and their investors.

• Policies and procedures subject to normal monitoring and review processes.
• Separation of functions between separately managed businesses or senior staff.
• Wall crossing rules: where LIOR becomes an insider, trading and recommendations on the relevant issuer are prohibited and the issuer is placed on a banned list.
• Proxy voting: where a material conflict is identified, an independent third party decides, the client approves, or LIOR elects not to vote.
• Rules on pay, gifts and inducements, personal account dealing and outside business activities.
• Declining to act where the conflict cannot be managed otherwise, and disclosure where measures do not sufficiently protect client interests.

LIOR GLOBAL PARTNERS has adopted a best execution policy to implement all reasonable measures to ensure the best possible result for the funds it manages when executing orders.

In determining what constitutes best execution, LIOR considers a range of factors such as price, liquidity, speed and cost, depending on their relative importance for the various types of orders or financial instruments. Transactions are principally executed via brokers selected and monitored on the basis of the criteria of the best execution policy.

Through the use of AMUNDI INTERMEDIATION, LIOR relies on Amundi’s best execution policy, available in the regulatory information section of the Amundi Intermediation website.

LIOR GLOBAL PARTNERS has designed and implemented a complaints handling policy in line with applicable regulations, under regular review.

1. What is a complaint?

A complaint is an expression of dissatisfaction made to LIOR related to the services provided or to the complaint handling process itself, and where a response or resolution is expected by the complainant.

2. How to make a complaint

A complaint must be formally presented in writing to the Complaints Handling Officer, Mr. Raphaël Remond, by email at contact@lior-gp.com or by post at LIOR GLOBAL PARTNERS, 3-5 Avenue des Citronniers, Le Prince de Galles, 98000 Monaco.

• Your name, position and contact details.
• Your relationship with LIOR and your contact person within LIOR.
• A written summary of the complaint, including when the conduct giving rise to it occurred.
• Copies of any documentation supporting the complaint.

3. Complaint handling process

A written acknowledgement is issued within 5 business days after receipt, including the name and contact details of the person in charge. LIOR investigates the complaint and provides a written explanation of the outcome no later than one month after receipt. Where a response cannot be provided within that period, the complainant is informed of the cause for the delay and of the expected completion date.

If the handling of the complaint does not result in a satisfactory answer, the complainant may contact the Commission de Contrôle des Activités Financières (CCAF) for out-of-court resolution within one year after filing the complaint with LIOR.