This communication has been issued in the United Kingdom by Affirmative Investment Management Partners Limited ("Affirmative”) which is authorised and regulated by the Financial Conduct Authority of the United Kingdom and is made to and directed solely at 

  1. existing customers of Affirmative and/or 
  2. persons who would be classified as a professional client or eligible counterparty under the FCA Handbook of Rules and Guidance if taken on as customers by Affirmative and/or 
  3. persons who would come within Article 19 (investment professionals) or Article 49 (high net worth companies, trusts and associations) of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2001 and/or 
  4. persons to whom this communication could otherwise be lawfully made in the United Kingdom. 

Any recipient of this communication who is not one of the intended recipients as set out above should disregard the communication and may not rely on or take any action in relation to the communication. Recipients of this communication in jurisdictions outside the United Kingdom should inform themselves about and observe all applicable legal or regulatory requirements.

Whilst Affirmative has taken reasonable care to ensure that the information in this communication is accurate at the time of its preparation. It should not be construed as the giving of advice or the making of a recommendation. In particular, actual results and developments may be materially different from any forecast, opinion or expectation expressed in this communication.


Pillar 3 Disclosures
Affirmative Investment Management Partners Limited


The CRD, to which the Firm remains subject as a consequence of the UK CRDIII implementing Regulations, have three pillars; Pillar 1 deals with minimum capital requirements; Pillar 2 deals with Internal Capital Adequacy Assessment Process (“ICAAP”) undertaken by a firm and the Supervisory Review and Evaluation Process through which the Firm and Regulator satisfy themselves on the adequacy of capital held by the Firm in relation to the risks it faces and; Pillar 3 which deals with public disclosure of risk management policies, capital resources and capital requirements.  


Affirmative Investment Management Partners Limited (“Affirmative”) is a MiFID Investment Management Firm.  It acts solely as agent, so the main protection to our customers is provided through client money and asset arrangements.  The Firm’s greatest risks have been identified as business and operational risk.  The Firm is required to disclose its risk management objectives and policies for each separate category of risk which include the strategies and processes to manage those risks; the structure and organisation of the relevant risk management function or other appropriate arrangement; the scope and nature of risk reporting and measurement systems; and the policies for hedging and mitigating risk, and the strategies and processes for monitoring the continuing effectiveness of hedges and mitigants.

Risk Appetite

Affirmative seeks to take a conservative approach to risk and it has endeavoured to reflect this approach in the design of the business organisation, investment philosophy and strategy, and composition of the client base. The amount of capital retained is designed to adequately cover regulatory capital requirements and provide for future business growth.

A number of key operations are outsourced by our clients, typically the Funds we provide Investment Management services to, to third party providers such as administrators reducing our exposure to operational risk.  The Firm has an operational risk framework (described below) in place to mitigate operational risk.  

Risk Management Objectives and Policies

Risk management is the process of identifying the principle risks, including regulatory compliance risks, to Affirmative achieving its strategic objectives. Central to this process is establishing appropriate controls designed to manage those risks and to ensure that appropriate monitoring and reporting systems are in place. Risk management is an inherent part of Affirmative’s business activities. Affirmative’s risk management framework and governance structure are intended to provide comprehensive controls and ongoing management of its major risks. Affirmative exercises oversight through the Risk Oversight Committee (ROC). The ROC meets periodically to review internal controls, risk management processes, regulatory compliance and relevant reports received from Affirmative’s outsource providers, advisors and auditors.

Amongst the risks inherent to the investment management process Affirmative has identified the following risks as being most relevant.

Credit Risk

Credit risk arises from cash and deposits with banks and financial institutions, as well as credit exposure to clients, including outstanding receivables and committed transactions.

The risk arises due to the potential non-payment of receivables and default by the banks. 

Affirmative conducts due diligence on any potential counterparty before it enters into any formal arrangements. Affirmative holds cash on deposit with global rated banks and other financial institutions pre-approved by the ROC. Exposures to such institutions are periodically reviewed by the ROC.

Operational Risk

Operational risk includes those risks or events that could impact Affirmative’s people, processing and technology in such a way as to impact the achievement of Affirmative’s goals and objectives.

The adequacy of internal controls in relation to operational risk is periodically assessed across Affirmative. Independent evaluation and testing of controls central to the investment process is undertaken on an annual basis and results are reviewed by the ROC.

Systems, internal controls and human resources are in place to mitigate exposure to operational risk.

Market Risk

Market risk is defined as the risk of adverse movements of global securities markets, exchange rates, or interest rates.

Market Risk exposure has been assessed by Affirmative and is limited to Affirmative’s exposure to foreign currency exchange rate risk and hence to any assets held on the Firm’s Balance Sheet denominated in a foreign currency. The Firms Reporting Currency is sterling and all foreign currency assets are converted into sterling where possible on a regular basis.

Affirmative is exposed to market movements through the impact a market downturn may have on the value of funds under management and the consequent impact on management and performance fees. Scenario stress-testing has been conducted as part of the Internal Capital Adequacy Assessment Process (ICAAP) and Affirmative believes that the firm holds sufficient capital to manage this risk.

Affirmative is exposed to foreign exchange risk as the bulk of its liabilities are in sterling but management and performance fees are predominately calculated and paid in foreign currencies, primarily US dollars. Affirmative monitors its exposure to currency risk and seeks to minimise its exposure to fluctuations in exchange rates. This may be achieved by hedging against foreign currency exposures.

Liquidity Risk

Prudent risk management requires the maintenance of sufficient cash balances to ensure the operational expenses of Affirmative can be met.

Affirmative has in place processes to manage and control liquidity risk. Affirmative has established risk tolerance levels against which the liquidity position is monitored. Cash flow forecasts are the principle management information tool employed to monitor liquidity on a day to day basis.

Affirmative has concluded no additional capital is required in order to manage this risk.

Capital Resources

The capital resources of the business comprise Tier 1 capital after required deductions. As a limited licence firm the capital resources requirement is calculated as the total of Pillar 1 and Pillar 2 capital.

Pillar 1 capital is the greatest of:

  • Base Capital Requirement of €50,000;
  • The sum of Market and Credit Risk Requirements; and
  • The Fixed Overhead Requirement (FOR).

Pillar 2 capital is calculated by Affirmative as representing any additional capital to be maintained against any risks not adequately covered under the requirement in Pillar 1 as part of its ICAAP.

At present Affirmative’s capital requirement is driven by the unlikely Pillar 2 Wind-Down Requirement, although the FOR and market and credit risks are reviewed periodically. Affirmative applies a standardised approach to credit risk, applying 8% to Affirmative risk weighted exposure amounts, consisting mainly of management fees due but not paid, and bank balances.

The regulatory capital analysis included below is calculated on this basis as at 30 November 2015. 

Having performed the ICAAP it is Affirmative’s opinion that no additional capital is required in excess of the Pillar 1 capital requirement.

As at 30 November 2015 Affirmative’s regulatory capital position was:

Capital Items £'000
Total Tier 1 Capital after Deductions 947
Pillar 1 Requirement 304
Pillar 2 Requirement 304
Capital in excess of Requirement 643
Capital solvency ratio 311%

There is a surplus of reserves above the capital resource requirement deemed necessary to cover the risks identified.

Remuneration Arrangements and Policy

We are required by the FCA to provide information on our remuneration arrangements. Affirmative has been categorised by the FCA as a 'Level 3 Firm' and is therefore subject to the minimum prescribed levels of remuneration disclosure.

Affirmative’s Remuneration is decided by the Board. The Board meets periodically to consider terms and conditions of employment, head count requirements and remuneration policy. 

Affirmative’s remuneration arrangements represent a combination of salary, bonuses and long term incentive schemes that are designed to ensure the sustainability of Affirmative and to align the interest of Affirmative and its employees and partners with those of its clients. Remuneration includes a variable discretionary component, based on Affirmative’s profitability, individual performance, and product performance. Individual performance includes a consideration of financial and non-financial measures. Financial measures are generally reviewed over a multi-year time horizon.


Stewardship Code Disclosure
Affirmative Investment Management Partners Limited

Under Rule 2.2.3R of the FCA's Conduct of Business Sourcebook, Affirmative Investment Management Partners Limited (the "Firm") is required to include on this website a disclosure about the nature of its commitment to the UK Financial Reporting Council's Stewardship Code (the "Code") or, where it does not commit to the Code, its alternative investment strategy.  The Code sets out a number of principles relating to engagement by investors with UK equity issuers, as follows:

The seven principles of the Code are that institutional investors should:

  • Publicly disclose their policy on how they will discharge their stewardship responsibilities;
  • Have and publicly disclose a robust policy on managing conflicts of interest in relation to stewardship;
  • Monitor their investee companies;
  • Establish clear guidelines on when and how they will escalate their activities;
  • Be willing to act collectively with other investors where appropriate;
  • Have a clear policy on voting and disclosure of voting activity; and
  • Report periodically on their stewardship and voting activities.

The Firm pursues an investment strategy to which the aims of the Code are not relevant.

The Firm follows a new approach to fixed income and cash management that gives ultimate power back to the end investor. The Firm focuses on bonds and cash instruments that both generate mainstream market returns and achieve positive externalities to benefit the local and global community. As such, its strategy does not result in it trading in single equities. 

Consequently, while the Firm supports the general objectives that underlie the Code, the provisions of the Code are not relevant to the type of trading currently undertaken by the Firm.  If the Firm's investment strategy changes in such a manner that the provisions of the Code become relevant, the Firm will amend this disclosure accordingly.

For further information on the Firm’s approach contact:  Stuart Kinnersley, stuart.kinnersley@affirmativeim.com; tel:  02073973701

3rd May 2017