TFI PZU - Investment Process
TFI PZU is part of the PZU Group. It manages investment funds for retail clients, institutional client assets and PZU Group funds.
For every product managed by TFI:
- investment funds and asset portfolios for external clients;
- investment funds dedicated to the PZU Group;
- asset portfolios of the PZU Group;
Within the scope of the legal remit and investment strategy of each fund or product, TFI takes investment decisions based on a comprehensive analysis of financial instrument issuers and their environment. These analyses cover the full spectrum of factors with an impact on the value, including risks to sustainable development. In the investment process, these risks are considered, inter alia, in financial, regulatory and legal analysis, as well as the level of entire instrument portfolio management.
Voting rights strategy
Guided by the interests of participants in the investment funds and clients to whom it provides portfolio management services, TFI PZU follows its “Strategy of Exercising Voting Rights from Financial Instruments in the Investment Portfolios Managed by TFI PZU”.
The company’s fundamental duties ensuing from its strategy are as follows:
- monitoring material events in the companies identified in the strategy;
- ensuring that voting rights are exercised in accordance with the investment objectives and investment policy of the respective fund;
- preventing conflicts of interest following from exercising voting rights and managing companies.
The strategy for exercising voting rights from financial instruments included in investment portfolios and investment funds managed by TFI PZU takes into account environmental, social responsibility and corporate governance issues when choosing how to vote at general meetings of companies included in the managed portfolios or investment portfolios.
Accordingly, TFI PZU:
- will actively vote on matters related to social and environmental issues as well as governance issues;
- will endorse the application of high corporate governance standards, in particular those that advance transparency, equal treatment of shareholders, independent oversight and the responsibility of shareholders and members of corporate authorities;
- will endorse actions for issuers to adopt, implement and publish governance and ethical principles, standards and procedures spanning the issuer’s management board, supervisory board and employees.
The policy in place provides for actions connected to exposure of mutual funds managed by TFI PZU SA to the equities of issuers in which an investment was made. They include monitoring issuers in terms of the investment risk with an eye to social and environmental impact and the corporate governance principles followed that constitute selected aspects of the socially responsible investing process. The research process is conducted in such a way so as to facilitate deliberate and responsible investment decision-making.
These practices serve the interests of participants of funds, grow the value of investments while simultaneously respecting environmental and CSR issues and building corporate governance. The purpose of this action is ensuring that investment decisions are made in accordance with the investment objectives and investment policy of the respective funds.
Good practices of subsidiaries
Voting Rights Strategy
TFI PZU actively participates in the corporate governance development process in its portfolio companies, by participating in their shareholder meetings and pursuing the goal of protection and creation of investment value for fund participants and its clients. Bearing in mind the remaining provisions of the strategy, TFI PZU espouses the principle that it strives to participate and actively vote in all shareholder meetings of companies in which it has, on behalf of its funds or clients, the right to exercise more than 5% of the total number of votes.
TFI PZU has adopted principles that guide its choices when voting at shareholder meetings of companies included in its mutual fund portfolios or investment portfolios. The rules contemplate among others active voting on matters related to social and environmental issues as well as corporate governance issues. Additionally, they include provisions encouraging stringent corporate governance standards, in particular those that advance transparency, equal treatment of shareholders, independent oversight and the responsibility of shareholders and members of corporate authorities.
PTE PZU – an Investment Process
PTE PZU (which manages the pension fund OFE PZU “Złota Jesień” and DFE PZU) has a formalized investment process
The key documents governing it are the „Principles of Investment Strategy” of each fund, the „Declaration of Principles of Investment Policy and Investment Objective of Open-Ended Pension Fund PZU Złota Jesień „, the „Declaration of Principles of Investment Policy of DFE PZU”, the procedure „Making Investment Decisions” and the „Instruction for Preparation of Analytical Materials by Investment Office Employees”.
The overriding goal of the investment process at PTE PZU is the long-term maximization of the value of units of account at the assumed level of acceptable risk and maintenance of the funds’ liquidity requirements.
PTE PZU takes investment decisions based on a comprehensive analysis of issuers of financial instruments and their environment. These analyses cover the full spectrum of factors that affect the value of financial instruments, including risks to sustainability. These risks are taken into account by the Company in the investment process in financial, regulatory and legal analysis, among others, as well as at the level of managing the entire portfolio. Each equity issuer analysis includes an internal ESG Scoring. It is a tool to potentially take into account future adverse effects of investment decisions on sustainability factors when making investment decisions.
PTE PZU expanded its investment process by assessment of the impact of private issuers of financial instruments on ESG factors. A tool for this purpose is the PTE PZU ESG Scoring. At stage one in 2022, the ESG Scoring became a required component of every investment recommendation by analysts of the PTE PZU Investment Department.
The PTE PZU ESG assessment relies on data consistent with the Regulation (EU) 2019/2088 of the European Parliament and of the Council of November 27, 2019. (the „SFDR Regulation”), and is therefore a tool with a potentially wide range of applications, in particular in the eventual decision to voluntarily disclose information in accordance with point Article 4(3) of the SFDR. Of the 14 parameters used, 13 are included in Annex 1 to Commission Delegated Regulation (EU) 2022/1288 of April 6, 2022 (the „RTS Regulation1 ”). The Scoring is a weighted average of the evaluation of 10 or 14 parameters, depending on the issuer’s business profile. In the case of less than 70% of data for a selected issuer, PTE PZU waives the issuance of its own rating and adopts the average of ESG ratings of external agencies.
PTE PZU’s ESG Scoring helps determine the ESG rating for issuers whose instruments account for more than 90% of the value of the portfolio of OFE PZU Złota Jesień.
1. The RTS (Regulatory Technical Standards), is a document that clarifies the negative effects on sustainability factors, which are dealt with in Article 4 of the SFD Regulation
„Assessing 100% of key suppliers for ESG risks” is part of the PZU Group’s ESG strategy. The key service providers for PTE PZU are brokerage houses. PTE PZU conducts an ESG survey of financial market brokerage providers at biennial intervals. The survey consists of 10 questions that evenly address all the aspects of sustainability. The results of the survey of brokerage firms in terms of ESG aspects were used in the process of evaluating and selecting brokerage firms for order execution.
Good practices of subsidiaries
Voting Rights Strategy
PTE PZU actively exercises corporate rights from shares in the funds’ portfolios. The participation of the company’s representative in all general meetings of companies that are in the portfolio of OFE PZU was adopted as a rule.
The manner in which the rights are exercised is governed by the „Principles of Corporate Governance in the Investment Activities of OFE PZU Złota Jesień and DFE PZU.” They include provisions on support for high standards of corporate governance including protection of minority shareholders’ rights and independent and professional supervision, and include boundary conditions for share-based incentive programs.
PTE PZU also takes into account the recommendations of Institutional Shareholder Services Inc. when creating voting instructions for company general meetings.