Hermes takes a responsible and prudent approach to managing the capacity of our strategies. We seek to protect our clients’ interests from two key perspectives by ensuring, to the extent possible, that:
(i) we can continue to maximise the potential to deliver sustainable, risk adjusted alpha by actively managing capacity so that our strategies’ portfolio characteristics can be maintained; and
(ii) Hermes’ products can continue to meet their liquidity commitments to investors and the FCA’s good practice guidance for liquidity.
Capacity management is therefore key to safeguarding optimal investor outcomes.
To assist in these efforts, Capacity Management Measures (the “Measures”) may be introduced to manage the size of assets within a particular strategy. The Measures include restricting investment from new investors and imposing a Maximum Subsequent Subscription Amount (the “Daily Limit”, i.e. a limit on the maximum amount a Shareholder can subscribe in a Share Class of a fund per Dealing Day), amongst other Measures as detailed in the relevant fund documentation and this web page from time to time.
Unless the context requires otherwise, any capitalised terms used on this web page shall have the meaning attributed to them in the relevant fund’s governing documentation.
The following Measures are currently in place:
Hermes Investment Funds plc
Hermes Asia ex-Japan Equity Fund (the “Fund”)
On 17 February 2017, the Hermes Investment Funds plc Board of Directors (the “Directors”) issued a shareholder notice to advise Shareholders that Measures are being applied to the Fund, effective 6 March 2017 (the “Effective Date”). As from the Effective Date, until advised otherwise, the Fund is closed to investment from new investors; however existing investors are still permitted to make subsequent investments up to the applicable Daily Limit, which will be adjusted depending upon the amount of capacity in the Fund and updated on this page without prior written notice.
The current Daily Limit in force until advised otherwise on this page is:
The base currency of the Hermes Asia Ex-Japan Equity Fund is USD. Foreign currency equivalent limits have been calculated using the WM/Reuters 12 noon rate as at 12 November 2019 and rounded to the nearest 5000. If any one of these foreign exchange rates move greater than 10% (in either direction) from the rate confirmed as at 12 November 2019, or as part of an at least annual review, all foreign currency equivalent limits will be updated on this web page only.
Exceptions to the Measures
Using the discretion permitted to the Directors within the Fund’s governing documentation, and remaining within the spirit of Hermes’ capacity management philosophy, the Directors have approved the following exceptions to the Measures.
(1) Permitting subscriptions greater than the Daily Limit (“Large Subscriptions”)
From the Effective Date, Shareholders will be permitted to make requests to Hermes at least 24 hours prior to the applicable Dealing Deadline of the proposed Dealing Day to make Large Subscriptions. This will be subject to Hermes’ discretion and will depend upon the current market liquidity and available capacity in the strategy on the Dealing Day. Because of this, requests to make Large Subscriptions may be declined.
In the interests of treating all Shareholders fairly, and depending upon the available capacity in the strategy, all Shareholders requesting to make a Large Subscription on a particular Valuation Day will either all be accepted, all declined or all offered an equal pro rata portion of the available capacity in the strategy, based upon the number of Shareholders requesting to make Large Subscriptions and not upon the Shareholders’ respective number of shares.
(2) Subscriptions by nominees
A Shareholder acting as nominee for a number of underlying beneficial investors (e.g. an investment platform) will be permitted to subscribe the Maximum Subsequent Subscription Amount for each underlying beneficial investor for whom it is holding Shares directly in the Fund as nominee. This will be on the basis that the Shareholder can provide the required undertakings, confirmations, information and ongoing reporting to Hermes.
(3) Permitting existing shareholders to invest via additional accounts
From the Effective Date, Shareholders will be permitted to make advance requests to Hermes, at least 24 hours prior to the applicable Dealing Deadline of the proposed Dealing Day, to invest into the Fund via a new account that is not currently on the Shareholder register. Prior approval from Hermes is required and Shareholders will be required to provide confirmation that they control the additional account. Because of this, requests to add additional accounts may be declined.
Additional accounts will be permitted to access the Fund on the basis of the terms agreed for the Shareholder’s existing accounts on the Shareholder register. As such, Shareholders currently invested in only C or RC Classes of Shares and wishing to add additional accounts / nominees to the Register will not be permitted to invest into F or R Classes of Shares.
(4) Interchangeable Daily Limit between multiple nominee accounts controlled by the same Shareholder
Shareholders that invest into the Fund via multiple nominee accounts are able to invest up to the Daily Limit in each nominee account per Dealing Day.
For operational efficiency, at their request, Hermes will permit Shareholders to aggregate the total available Daily Limit across their nominee accounts so that it can be traded interchangeably across the accounts on a daily basis. However, the total Daily Limit across the nominee accounts will be reduced by a pre-agreed percentage (the “Aggregated Daily Limit”), such that the Aggregated Daily Limit is less than the ‘sum of the parts’ in order to continue to manage capacity utilisation.
Additional nominee accounts that the Shareholder has used to invest into the Fund (pursuant to exception 3 above) following the Effective Date will not increase the Aggregated Daily Limit that the Shareholder will be permitted to trade.
This exception will be available to all Shareholders on request following confirmation of the nominee accounts controlled and the percentage reduction to be applied being agreed with Hermes.
(5) Permitting new subscriptions from a restricted group of prospective investors
The Directors have also pre-approved a restricted group of investors who are permitted to invest into the Fund, within reasonable time following the implementation of the Measures. These prospective investors have been in extended discussions and due diligence with Hermes regarding an investment in the Fund, however due to internal timings are not able to invest before the Effective Date.
This restricted group of prospective investors are not guaranteed to be able to invest into the Fund and their potential investment will be subject to (i) there being sufficient available capacity within the strategy on the day of their investment and (ii) on the basis that it is not expected that their investment will adversely impact existing Shareholders.
For any queries please contact [email protected], or your sales contact.