Sub Advisory Agreement

Wellington has a well-established sub-counsel relationship with Hartford Funds and serves as a sub-advisor to the company. Hartford International Equity Fund is a fund that is advised by Wellington. The objective of the fund is to achieve a long-term valuation of capital by investing in international equities. The fund offers four classes of shares: A, F, I and Y. Expenses range from 1.89% to 1.40% for each class of shares with a gross cost rate of 1.89% to 1.40%. A little less than a week goes by without another agreement on the management of funds by third parties. English-speaking countries call it sub-council. Their popularity is such that this issue was part of the Brexit negotiations. Indeed, the ACF (the UK Financial Conduct Authority), the AEMF (the EU European Securities and Markets Authority) and all national authorities have reached an agreement in the event of a hard Brexit.

Europeans will be able to continue to delegate part of their management activities to the UK. This is a clear trend that is not expected to end in the foreseeable future. There is such an appetite for sub-counseling that, despite the price pressure they are under, asset managers have had no choice but to get into the breach and ensure that they are able to provide their sub-counsel skills by including the constraints that these intermediaries want. An under-accounted fund is an investment fund managed by an external asset manager. The model is illustrated by the diagram on the other side. An under-advised fund is mainly used by European traders to allow access to an open architecture. The sub-council model is a mix of historical allocation of funds and institutional mandates. This requires a strong ability to select managers with a proven track record and to monitor them continuously, combined with an efficient operating model for the distributor to set up the delegation. The sub-council model requires scale and operational delays. While replication of some existing processes may seem simple, tailored strategies require more costs and operations (portfolio and risk management, communication and marketing, etc.). In addition, if the distributor is not satisfied with the sub-consultation, it may take a long time to modify or modify them.

The sub-consulting model appears to be a win-win agreement for customers, third-party asset managers and distributors, despite some challenges for third-party distributors and asset managers. The sub-consulting model has some important advantages for asset managers, such as . B to keep a product for a much longer period of time (you can`t just enter or leave an under-assistance in the blink of an eye). If we add the much higher volumes – since they are distributed on a larger scale – and the projection of the brand within the distribution networks (co-branding), the agreement becomes much more balanced despite the policy of price pressure. The next generation of customers is waiting for something else. They want to make sense of their money and, for example, invest in new asset classes, with ESG and Impact privileges. Some of these strategies can be complicated to carry out internally, and sub-counsel can certainly help. In a negative interest rate relationship, low investment returns make fees proportionately higher. Cheaper products such as passive investments are a solution, high alpha products or investments in non-traditional strategies (for example. B through sub-councils).

Sub-consulting relationships span the entire investment universe.

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