FCA Regulatory Disclosure on the Stewardship Code
Under Rule 2.2.3R of the Financial Conduct Authority (“FCA”) Conduct of Business Sourcebook (“COBS”), the FCA require authorised firms such as Infinity Investment Partners Limited to disclose the nature of its commitment to the FRC’s UK Stewardship Code or, where it does not commit to the Code, its alternative investment strategy.
The Code aims at enhancing the quality of engagement between institutional investors and companies. It seeks to set out good practices on engagement with investee companies, resulting in improved long-term returns to shareholders and efficient exercise of governance responsibilities.
The Financial Reporting Council’s (“FRC”) defines ‘stewardship’ as ‘the responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society.’
The 2020 Code Principles are:
Purpose and governance:
- Signatories’ purpose, investment beliefs, strategy, and culture enable stewardship that creates long-term value for clients and beneficiaries, leading to sustainable benefits for the economy, the environment and society.
- Signatories’ governance, resources and incentives support stewardship.
- Signatories manage conflicts of interest to put the best interests of clients and beneficiaries first.
- Signatories identify and respond to market-wide and systemic risks to promote a well-functioning financial system.
- Signatories review their policies, assure their processes and assess the effectiveness of their activities.
Investment approach:
- Signatories consider client and beneficiary needs and communicate their stewardship and investment activities and outcomes to them.
- Signatories systematically integrate stewardship and investment to fulfil their responsibilities, including material environmental, social and governance issues and climate change.
- Signatories monitor and hold to account managers, and-or service providers.
Engagement:
- Signatories engage with issuers to maintain or enhance the value of assets.
- Signatories, where necessary, participate in collaborative engagement to influence issuers.
- Signatories, where necessary, escalate stewardship activities to influence issuers.
Exercising rights and responsibilities:
- Signatories actively exercise their rights and responsibilities.
The adherence to the Code is voluntary, and Infinity Investment Partners Limited generally supports the objectives that underlie the Code. However, the Firm adopts an alternative strategy to stewardship by reviewing this approach on a case by case basis and considering the best way of optimising returns on each investment.
The Firm believes that any investment analysis cannot exclude ESG principles for a variety of reasons:
- Companies whose actions promote ESG criteria have been shown over time to generate extra returns for their investors;
- ESG factors directly influence a company’s lifetime cost of capital and hence its valuation.
The combination of the two above factors leads to an ever-increasing amount of institutional capital following such criteria. Thus, the first derivative is that most companies with ESG-positive profiles will benefit from the growing level of institutional coverage.
Should anything change in the future where the Firm deems it’s more relevant to committing to the Code, the Firm will update this disclosure accordingly.
For further details on any of the above information, please contact compliance at compliance@infinityinvestmentpartners.com
Shareholder Rights Directive Disclosure
- Under COBS 2.2B.5R of the Shareholder Rights Directive (“SRD II”), requires firms to either;
- Develop and disclose an “engagement policy” describing how the Firm integrates shareholder engagement in its investment strategy; or
- Disclose why the Firm has chosen not to comply with those requirements
MIFIDPRU 8 Disclosure
The Financial Conduct Authority (“FCA” or “regulator”) in the Prudential sourcebook for MiFID Investment Firms in the FCA Handbook (“MIFIDPRU”) sets out the detailed prudential requirements that apply to Infinity Investment Partners Limited (“Infinity” or the “Firm”). Chapter 8 of MIFIDPRU (“MIFIDPRU 8”) sets out public disclosure rules and guidance with which the Firm must comply, further to those prudential requirements.
Infinity is classified under MIFIDPRU as a small and non-interconnected MIFIDPRU investment firm (“SNI MIFIDPRU Investment Firm”). As such, the Firm is required by MIFIDPRU 8 to disclose information regarding its remuneration policy and practices.
The purpose of these disclosures is to give stakeholders and market participants an insight into the Firm’s culture and to assist stakeholders in making more informed decisions about their relationship with the Firm.
This document has been prepared by Infinity in accordance with the requirements of MIFIDPRU 8 and is verified by the Firm’s Management Committee. Unless otherwise stated, all figures are as at the Firm’s financial year-end.
Remuneration Policy and Practices
Overview
As an SNI MIFIDPRU Investment Firm, Infinity is subject to the basic requirements of the MIFIDPRU Remuneration Code (as laid down in Chapter 19G of the Senior management arrangements, Systems and Controls sourcebook in the FCA Handbook (“SYSC”)). Infinity, as an alternative investment fund manager, is also classified as a collective portfolio management investment firm, and as such, is also subject to the AIFM Remuneration Code (SYSC 19B). The purpose of the remuneration requirements is to:
- Promote effective risk management in the long-term interests of the Firm and its clients;
- Ensure alignment between risk and individual reward;
- Support positive behaviours and healthy firm cultures; and
- Discourage behaviours that can lead to misconduct and poor customer outcomes.
The objective of Infinity’s remuneration policies and practices is to establish, implement and maintain a culture that is consistent with, and promotes, sound and effective risk management and does not encourage risk-taking which is inconsistent with the risk profile of the Firm and the services that it provides to its clients.
In addition, Infinity recognises that remuneration is a key component in how the Firm attracts, motivates, and retains quality staff and sustains consistently high levels of performance, productivity, and results. As such, the Firm’s remuneration philosophy is also grounded in the belief that its people are the most important asset and provide its greatest competitive advantage.
Infinity is committed to excellence, teamwork, ethical behaviour, and the pursuit of exceptional outcomes for its clients. From a remuneration perspective, this means that performance is determined through the assessment of various factors that relate to these values, and by making considered and informed decisions that reward effort, attitude, and results.
Characteristics of the Firm’s Remuneration Policy and Practices
Remuneration at Infinity is made up of fixed and variable components. The fixed component is set in line with market competitiveness at a level to attract and retain skilled staff. Variable remuneration is paid on a discretionary basis and takes into consideration the Firm’s financial performance as well as the financial performance of each business unit, and the financial and non-financial performance of the individual in contributing to the Firm’s success. All staff members are eligible to receive variable remuneration.
The ultimate decision on variable remuneration to be awarded to staff members is made by the Firm considering its current profits and any future capital required to be put aside for expansion plans or for regulatory capital purposes on the basis of forecasts. The outcome of these considerations will then be used to determine a bonus pool to be distributed to staff members. The amount allocated to each individual will be based on their overall contribution to the Firm as a whole, is fully discretionary and the decision rests with the Management Committee. Any bonus pool will always be based on the profit of the Firm and not future income. The Management Committee will also consider the Firm’s financial and capital position, taking into account any potential costs/capital strains which may occur over the coming year. The bonus pool is linked to the performance of the Firm as a whole and not individual trading performance. The key financial performance measures used to determine the total variable pay-out is the Firm’s net profit/loss after all expenses have been paid and this will be supplemented by an assessment of other key performance measures and identified risks outlined within the Firm’s Internal Capital Adequacy Risk Assessment (“ICARA”).
Individual staff performance at Infinity is determined using financial and non-financial criteria on a meritocratic basis which is gender neutral. Performance is based on a range of criteria on which each staff member, taking into account their role, is assessed. The performance of staff members is not based upon contribution to investment performance only; it also includes factors such as their adherence to the Firm’s compliance policies and risk limits. Any violations of these policies will be considered when determining variable remuneration and may have a negative impact on the amount of variable remuneration awarded.
The fixed and variable components of remuneration are appropriately balanced: the fixed component represents a sufficiently high proportion of the total remuneration to enable the operation of a fully flexible policy on variable remuneration. This allows for the possibility of paying no variable remuneration component, which the Firm would do in certain situations, such as where the Firm’s profitability performance is constrained, or where there is a risk that the Firm may not be able to meet its capital or liquidity regulatory requirements.
Governance and Oversight
The Management Committee is responsible for setting and overseeing the implementation of Infinity’s remuneration policy and practices. In order to fulfil its responsibilities, the Management Committee:
- Is appropriately staffed to enable it to exercise competent and independent judgment on remuneration policies and practices and the incentives created for managing risk, capital, and liquidity.
- Prepares decisions regarding remuneration, including decisions that have implications for the risk and risk management of the Firm.
- Ensures that the Firm’s remuneration policy and practices take into account the public interest and the long-term interests of shareholders, investors, and other stakeholders in the Firm.
- Ensures that the overall remuneration policy is consistent with the business strategy, objectives, values, and interests of the Firm and of its clients.
Infinity’s remuneration policy and practices are reviewed annually by the Management Committee.
Quantitative Remuneration Disclosure
For the financial year 2023, the total amount of remuneration awarded to all staff was £1,180,232 of which £980.232 comprised the fixed component of remuneration, and £200,000 comprised the variable component. For these purposes, ‘staff’ is defined broadly, and includes, for example, employees of the Firm itself, directors and secondees.