The Manager has adopted policies to ensure that the Manager or sub-advisors retained by the Manager seek to achieve best execution of client portfolio transactions. The Manager employs trading techniques, methods and venues in an effort to seek the best overall price and execution available to meet its clients’ specific needs. The Manager’s overall goal is to execute portfolio transactions at the most favorable prices and in the most efficient manner possible.
In connection with the selection of brokers and the placing of equity portfolio transactions (on behalf of the Portfolios and other clients of the Manager), the Manager seeks the best overall price and execution available from responsible brokerage firms, taking into account all factors deemed relevant, including by way of illustration, price, the size of the transaction, the nature of the market or the security, the amount of the commission, the timing and impact of the transaction taking into account market prices and trends, the reputation, the need for anonymity in the market, experience and financial stability of the brokers or dealers involved, and the quality of services rendered by the broker in other transactions.
While commission rates are monitored as an aspect of best execution, the Manager may determine that the broker charging the lowest commission may not necessarily provide the best execution for a client. Commissions are only one factor considered when determining overall transaction costs. Where the Manager uses soft dollars, the Manager may cause a client to pay a broker that provides brokerage and/or research services to the Manager an amount of commissions for effecting a securities transaction for the client in excess of the amount of commissions other brokers or dealers would have charged for the transaction. This can occur only if the Manager determines in good faith that the amount of the commission to be paid is reasonable in relation to the value of the brokerage and research services provided by the broker either in terms of a particular transaction or the Manager’s overall responsibilities for discretionary accounts.
The Manager periodically and systematically reviews the performance of the broker-dealers that execute its transactions, including the commission rates paid to brokers by considering the value and quality of brokerage services provided. The quality of a broker’s services is measured by analyzing various factors that could affect the execution of trades. These factors include the ability to execute trades with a minimum of market impact, the speed and efficiency of executions, electronic trading capabilities, adequacy of capital, information provided to the adviser, and accommodation of the adviser’s special needs. The Manager may employ outside vendors to provide reports on the quality of broker-dealer executions (e.g. ITG/Plexus).
For fixed income portfolio transactions, the Manager must seek best execution for all accounts by executing at the most favourable prices and in the most effective manner possible. The Manager utilizes an order process to execute new issue trades and either an order process or a competitive bidding process to execute secondary market trades. The Manager will execute trades only with brokers that have been reviewed and approved by the sub-advisor’s Head of the Fixed Income Team or a designee.
In determining which venue or venues and process (order approach or competitive bids/offers) to employ to effect secondary market trades, traders may consider factors such as execution price, speed of execution, the size of the order(s), the trading characteristics of the security involved, execution capability, a broker-dealer’s status as primary market maker in the security or other factors deemed relevant by the trader.