1. Objective
The main objective of this policy is to ensure that all client portfolios are treated fairly and equitably over time. This includes the allocation of investment opportunities, best execution of trades, and voting of proxies, regardless of strategy, fee arrangements, or client influence.
2. Fair Allocation Policies
Futurum Capital Asset Management LTDA. (“Futurum”) adopts several policies to ensure fair allocation of investment opportunities based on the following approach:
Company and Employee Interests: Accounts with employee interests or with conflicts of interest from Futurum do not receive preferential treatment.
Equal Dissemination: Investment ideas and recommendations are disseminated equally among all professionals, giving all accounts the same opportunity to act on that information.
Identification of Participating Accounts: The decision of which accounts participate in an investment opportunity and the amount is based on objective factors such as asset type, portfolio structure, account goals, risk tolerance, tax situation, and other practical considerations. Price limits and percentages may vary among accounts.
Meeting Client Interests: Orders from all participating accounts under the responsibility of a manager are submitted at the same time, except in specific cases. Generally, all orders for the same asset are aggregated to optimize execution and reduce costs. However, aggregation may not be possible due to system, legal, or operational limitations.
Order Priority: If market liquidity is insufficient to meet all orders, prioritization is based on objective factors, such as correcting guideline violations, preventing violations, investing new funds, preventing monitoring errors, and portfolio rebalancing.
Rotational Trading: Orders with the same priority must be negotiated through a fair and objective rotation process.
Allocation: Executions of aggregated orders are combined to determine an average price. Then, assets are allocated to accounts using automated algorithms for a fair and objective distribution over time. These algorithms consider factors such as reducing custody fees and preventing allocations that would be uneconomical.
Deviations from Standard Methodologies: In cases where algorithms do not produce ideal results, an alternative allocation method may be used to ensure a fair and equitable distribution.
3. Special Situations
It is common for multiple aggregated orders for the same asset to have different execution prices. Additionally, the policy addresses the following special situations:
Initial Public Offerings (IPOs): Allocated only to accounts whose objectives are compatible with the issuer. Distribution may be made proportionally, but not all accounts may participate due to legal or client restrictions.
Secondary Offerings: Allocated using standard methodologies, considering situations where assets are allocated based on the client's existing holdings.
Short vs. Long Positions: The trading desk uses its discretion to execute orders in a way that limits market impact on both types of positions.
4. Exceptions and Tax Considerations
There may be exceptions to the described processes. For example, in the sale of assets regardless of tax considerations, taxable and tax-exempt accounts are simultaneously eligible.
Tax Gains: In situations where tax gains influence the sale, assets in tax-exempt accounts may be sold first.
Tax Losses: When tax losses influence the sale, priority is given to taxable clients, as the loss has a specific impact in a given year.
5. Limits and Exclusions
Position Limits: Regulatory limits may prevent all investment opportunities from being made available to all services and products. Futurum may limit opportunities at its discretion.
Exclusion of Services: Futurum reserves the right to exclude certain investment services from the aggregation and allocation procedures if it is in the best interest of clients or due to regulatory considerations.
6. Policy Review
This policy will be reviewed annually or whenever necessary by the Compliance Department in conjunction with the portfolio manager to ensure it is up to date with legislation and best management practices.
Name: Heloísa Lourenço Ishii Position: Administrator
