Best Execution Policy of Meriten Investment Management GmbH (Meriten Investment Management), Düsseldorf


Acting as your fiduciary in managing your investments, we seek to obtain the best possible result for the portfolio in the execution of each individual portfolio trade. The requirement to ensure best execution when purchasing and selling assets has been implemented in Germany in § 168 section 7 KAGB and § 33a WpHG and, in further detail, in Art. 27 and 28 of the Delegated Regulation (EU) No. 231/2013 in conjunction with § 2 section 4 KAVerOV and § 11 WpDVerOV, respectively. Such provisions apply to the management of investment funds and financial portfolio management in a very similar way. In accordance with the foregoing regulations, Meriten Investment Management GmbH (Meriten Investment Management) therefore applies its order execution policy across all portfolios it manages, regardless of whether the fund was launched by  itself or whether the fund’s management has been outsourced to it by a third party or whether the services rendered qualify as financial portfolio management.

If the management of a mandate has been delegated to third parties as part of the outsourcing of portfolio management services, including the execution of orders, such delegation will also comprise the duty to exercise due diligence in selecting and instructing brokers and counterparties as well the responsibility for providing best execution.

We execute trades in a wide range of markets and in a variety of liquid and less liquid financial instruments.

Prior to being included in our broker list, brokers are assessed based on a number of criteria.

If the portfolio management has been outsourced to a third party, we oblige such third party to select its brokers with due care and to establish, on its own account, an appropriate order execution policy.

Relevant aspects for assessing brokers include achievable price, costs, data and order taking quality as well as speed of execution, likelihood of execution (liquidity of the market concerned, quality of information on market activity and market access of the respective broker, including access to primary markets), settlement quality and their ability to meet reporting requirements. The relative weighting of these factors will differ according to the portfolios’ objectives, invest-ment policy and specific risks as well as the nature of the order and the characteristics of the financial instruments and the execution venues available. Ordinarily, achievable price and costs will have the highest priority. There may be cases, though, in which investment objectives, risk considerations, order size, the time of the order, the financial instrument’s limited liquidity or extraordinary market conditions may necessitate a different weighting in the best interest of the portfolio. We trade both through brokers that transmit an order on our behalf to an execution venue and directly with the broker acting as counterparty.

Orders will be executed through European and non-European brokers. Non-European brokers are not subject to the WpHG or its European source, the MiFID, but are believed to provide best execution for certain types of trades. This may be the case when financial instruments are not traded on European execution venues or if price and ancillary expenses are more favourable.

European brokers (EU) are subject to the duty to obtain best execution as required by MiFiD. We ensure that they have to comply with this duty also with regard to the mandates managed by us. In line with best execution, the broker may execute the order on an organised market, a stock exchange, through a multi-lateral trading facility, systematic internalisers, market makers or other providers of liquidity, or by dealing in their own name. If the latter is the case, the broker also acts as counterparty. Dealing in one’s own name is common practice especially in fixed income markets as well as in the trading of currencies and certain derivatives. In some cases, we also use brokers as counterparty for trades in equities and exchange-traded derivatives, if we expect them to provide best execution.

In some markets, not all financial instruments are available from all brokers. This is especially the case on bond markets where bond debentures tend to be traded on over-the-counter markets (OTC). Unlisted derivatives (flex options, swaps, CDS and other forward contracts) are always traded OTC. These markets do not necessarily offer transparency as regards prices and liquidity. In the interest of our mandates, we seek to obtain comparative quotes from different brokers. The price quotes received may change quickly or be withdrawn over time and in response to market movements. In some cases, there is no other party wishing to buy or the sell the security. It may therefore be necessary to accept the price first offered without being able to request or obtain further prices elsewhere.

We may request prices either electronically or by phone. Where instruments are traded through electronic trading systems (e.g. Tradeweb, Bloomberg, FXALL), we may make use of such electronic trading system to obtain information on liquidity and to compare prices. Such trading systems are not available for all financial instruments, though.

Alongside the aforementioned aspects, we will consider the following criteria in choosing the most appropriate execution venue prior to placing an order:

  • The mandates’ objectives, investment policy and specific risks, as set forth in the sales prospectus, the contractual terms or in your portfolio management agreement concluded with us or in the form of client-specific restrictions and instructions
  • Characteristics of the order and the asset in question and the common execution route for the financial instrument concerned
  • The order’s potential impact on the price of the financial instrument concerned and its minimisation by feeding the order smoothly into the market
  • Order size in relation to the common size of trades in the respective financial instrument
  • Credit standing of the broker or the counterparty
  • Access to liquidity and execution capacities
  • Ancillary expenses associated with the transaction
  • Characteristics of the individual execution venues
  • Any other criteria relevant to the execution of the order

We generally purchase shares in investment funds through the respective custodian bank at the share price determined in accordance with the Investment Act, except in the case of ETFs (Exchange Traded Funds).

For many target funds, there is also the option of executing such trades through an exchange. In such case, settlement is effected based on an estimated price that does not necessarily correspond to the target fund’s official share price. The ancillary expenses incurred for the purchase may be lower or higher depending on the order size.

With a view to minimising market impact and avoiding placing one client at a disadvantage over others, orders for the same instrument will be aggregated for execution. In the event of several partial executions, all aggregated orders will be settled at the mixed price. If an order cannot be executed in full, we will allocate any partially completed orders between the different mandates on a pro rata basis. However, we reserve the right to deviate from this allocation rule in exceptional cases, e.g. if it is impossible to achieve the minimum denomination prescribed by a portfolio.

Prices will be checked daily for market compliance on an ex post basis, supplemented by more detailed ad-hoc best execution checks. In addition, we will conclude transparent agreements on transaction fees and analyse ancillary expenses for brokers at least on an annual basis.

The policy will be reviewed and updated on a regular basis (at least once a year or in case of material changes). Any changes thereto will be communicated to our clients.

Our objective is to take all necessary steps to provide the best possible result for the funds and mandates we manage in executing or placing orders.

*as per March 2014