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Man Investments’ corporate responsibility
perspective

Man Investments’ objective is to provide, structure and distribute a wide range of alternative investment products: essentially a mechanism for return diversification, whose principal aim is to produce attractive risk-adjusted returns with low correlation to traditional equity and bond investments.

Alternative investment managers seek to exploit market anomalies; they seldom look to become stakeholders in the businesses that underlie the securities traded, and rarely hold individual bonds and equities for extended periods as traditional asset managers do. The use of programme trading algorithms and the speeds at which trades are often made mean that exposure to particular companies or industries can be made and unwound in minutes, thereby rendering transactions ‘neutral’ in terms of methodologies based on ‘negative ethical screening’.

In contrast to traditional asset management businesses, therefore, Man Investments’ fund managers typically base their trading decisions on publicly available quantitative information and indicators, such as price, volatility, liquidity and open interest, with the investment vehicle being a derivative, such as a future or option, rather than a primary instrument such as an equity or a bond. There is therefore very little if any direct investment ‘interest’ in the obligor of the instrument. This lack of any direct investment ‘interest’ rules out any direct ownership or governance relationship between Man Investments and individual investments. In most cases Man Investments conducts its investment activities through third party fund managers, further increasing its separation from the underlying issuer of the bond or equity.

Consequently the division’s corporate responsibility perspective is quite different from that of a traditional asset manager. Investors in the division’s products have taken a specific decision to invest precisely because investment decisions are driven by measures which are quantitative, transparent and inherently objective.

Man Investments nevertheless recognises the need to select and monitor diligently the third party fund managers to whom it delegates responsibility for the management of funds allocated to them. The same need for due care applies where Man Investments includes external funds in the structure of its products.

Investment practices and relationships with external fund managers and other third parties
Man Group’s alternative investment management activities are concentrated within its Man Investments division. This section offers a more detailed overview of what the Group considers the key corporate responsibility challenges associated with alternative investment management, as distinct from more traditional asset management, as the underlying investments can be selected and monitored according to specific corporate responsibility criteria.

    Man Group considers the main areas in which it can apply its corporate responsibility principles of good governance and ethical conduct to be:
  • Man Group’s own investment practices and processes, as carried out within Man Investments
  • Due diligence and ongoing monitoring of third party fund managers and other third parties

The Group’s policies regarding the above are set out in the following sections.

Man Group’s own investment practices and processes
Where investment funds are managed and/or administered by Man Investments (i.e., by AHL, Man Global Strategies, Glenwood or RMF), Man Investments is directly responsible for adhering to the Group’s policy on corporate responsibility. This includes, in particular:

    Ongoing compliance with:
  • All relevant external (i.e., legislative and/or regulatory) requirements, including those relating to anti-money laundering
  • The investment guidelines (including investment strategies, restricted investments and other relevant terms) set out in the relevant fund prospectus (or individual customer/investor instructions or ‘mandate’)
  • Adherence to the Group principles relating to due care towards customers

Compliance with relevant legislative and regulatory requirements
As a UK regulated financial services entity, Man Investments is regulated by the Financial Services Authority, while subsidiaries and investment management companies situated elsewhere are regulated by the appropriate authorities in their countries of domicile.

    Man Investments is also subject to all relevant legislation in the UK and, where relevant, in other countries where its different investment management entities and individual funds are registered, particularly in relation to:
  • Anti-money laundering and ‘Know Your Customer’
  • Investment and/or investment management rules
  • Data protection

Man Investments has a fully integrated compliance function which oversees and coordinates the compliance process across all entities, ensuring that any necessary action is taken (e.g., in relation to reporting).

Compliance with anti-money laundering legislation
Man Investments’ compliance function also ensures that all relevant entities comply fully with anti-money laundering monitoring and reporting protocols, in particular in relation to the verification of customers’ identity and the reporting of suspicious transactions.