EU Sustainability Disclosure

Disclosure according to the Article 3. and 4 of EU Regulation No 2019/2088 on sustainability‐related disclosures in the financial services sector (SFDR) on policies for addressing sustainability risks and on the principal adverse impacts of investment decisions on sustainability factors

Erste Alapkezelő Zrt. (hereinafter: Company) applies the provisions of this disclosure to all collective investment portfolios and portfolios under its management.

The following describes the most substantial – material or considered by the Company or its owner the Erste Asset Management GmbH (hereinafter: EAM) to likely be material – adverse impacts of investment decision on sustainability factors.

Disclosure according to the Article 5 of EU Regulation No 2019/2088 on sustainability‐related disclosures in the financial services sector (SFDR)

Transparency of remuneration policies in relation to the integration of sustainability risks

The remuneration system described in this remuneration policy is conducive to an appropriate management of sustainability risks as defined by SFDR and is in line with the sustainability strategies of EAM.

In connection with the consideration of sustainability risks in the remuneration policy of the Company, particular care is taken to ensure that no excessive risk taking with regard to sustainability risks is encouraged and that the remuneration structure is linked to a risk-weighted performance

Accordingly, the consideration of sustainability risks in the investment process is incorporated into the performance assessment of the fund and portfolio management. The Company aims to measure the fulfilment of the above-mentioned principles by the Employees individually described KPI performances.

Disclosure in accordance with Article 6 of the SFDR - on the integration of sustainability risks

Sustainability risk means an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment;

The sustainability risks are not depicted as a discrete type of risk but are included in the existing risk categories because they impact existing risk types to which the investment fund is potentially exposed.

The Erste Asset Management Limited (hereinafter: Company) has identified the following relevant sustainability risks: 

  • Environmental risks relating to mitigating the effects of climate change, adaptation to climate change and the transition to a lower-CO2 economy, protecting biodiversity, resource management, waste, and other harmful emissions. 
  • Social risks relating to working and safety conditions and compliance with recognised labour standards, respecting human rights, and production safety.
  • Governance risks relating to the due diligence obligations of corporate managers, measures for fighting bribery and corruption, and compliance with the pertinent laws and regulations.   

The minimum standards for direct investments are the fundamental environmental and sustainability requirements for the Company’s portfolios. In order to comply with the minimum requirements, the Company applies a ban list to issuers in the following three categories:

Coal mining

By substantially limiting investments in coal, the Company contribute to a shift away from the greatest source of greenhouse gas emissions and to displacing this energy source from the market over the long term..

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Weapons manufacturer and trafficking of arms

A key consideration is the exclusion of controversial weapons (manufacture and sale), which are regulated or prohibited under international conventions because of the immense suffering they can inflict upon the civilian population

Enhanced screening

In order to comply with social and ethical principles, the Company also excludes issuers from its investment universe that may be associated with child labor, pornography, and the Company also excludes food speculation.

The requirements described above also apply when the Company purchases investment funds managed by the Erste Group. In cases where the Company does not intend to purchase investment funds managed by the Erste Group in the managed portfolios, it seeks to comply with the requirements described above when selecting the funds to be acquired.

Compliance with these minimum requirements is implemented through the Company's Securities Approval Process.

The Company’s owner (Erste Asset Management GmbH) also makes use of data from external providers to collect raw sustainability-related inputs for its own analyses.

Given that the data used may be incomplete, inaccurate and temporarily unavailable, there is a risk that a security or a result may not be applicable.

When integrating the investment decisions of sustainability risks, the Company uses the group's advanced, own rating model, the so-called ESGenius. The aim of this rating model is to combine the prevailing sustainability trends in the market (ethics-oriented approach and risk view) and to produce a complex statistical measure for issuers. By combining data from different providers, the risk of data gaps can be reduced and the authenticity of a different viewer can be verified.

The criteria taken into account in the own rating model can be found in the „Handbook for the Responsible Investing” of Erste Asset Management GmbH:

https://www.erste-am.hu/en/private-investors/sustainability

When selecting the securities to be used in portfolio management, the Company pays special attention to sustainability risks.

A forward-looking assessment of the expected impact of sustainability risks on the portfolio’s yield results that the performance of a given portfolio achieves lower overall performance or a lower yield in certain market phases compared with other portfolios of similar composition and from portfolios implementing a similar investment strategy may achieve lower returns in certain market phases.

In the Company's view, taking sustainability risks into account can have a positive effect on returns, as securities of issuers with higher sustainability risks are given less weight in the investment portfolio, thus mitigating or avoiding disproportionately weak results due to a potential sustainability risk event.

The forward-looking assessment of the likely impacts of sustainability risks on the Fund’s yield is based on the fact that an investment fund may achieve lower overall performance or a lower yield in certain market phases compared with other financial products whose underlying assets are not selected on the basis of sustainability criteria and that have no sustainability risks.

However, the Company believes that taking sustainability risks into account can have a positive impact on yield because the resulting lower inclusion or complete exclusion of securities from certain issuers in the portfolio can also mitigate or preclude disproportionately negative returns stemming from the occurrence of a specific sustainability risk.

Disclaimer

This document is an advertisement. All data is sourced from Erste Asset Management GmbH, unless indicated otherwise. Our languages of communication are German and English.

The prospectus for UCITS (including any amendments) is published in Amtsblatt zur Wiener Zeitung in accordance with the provisions of the InvFG 2011 in the currently amended version. Information for Investors pursuant to § 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH, pursuant to the provisions of the AIFMG in connection with the InvFG 2011.

The fund prospectus, Information for Investors pursuant to § 21 AIFMG, and the key investor document/KID can be viewed in their latest versions at the  web site www.erste-am.com or obtained in their latest versions free of charge from the domicile of the management company and the domicile of the custodian bank. The exact date of the most recent publication of the fund prospectus, the languages in which the key investor document is available, and any additional locations where the documents can be obtained can be viewed on the web site www.erste-am.com.

This document serves as additional information for our investors and is based on the knowledge of the staff responsible for preparing it at the time of preparation. Our analyses and conclusions are general in nature and do not take into account the individual needs of our investors in terms of earnings, taxation, and risk appetite. Past performance is not a reliable indicator of the future performance of a fund. Please note that investments in securities entail risks in addition to the opportunities presented here. The value of shares and their earnings can rise and fall. Changes in exchange rates can also have a positive or negative effect on the value of an investment. For this reason, you may receive less than your originally invested amount when you redeem your shares. Persons who are interested in purchasing shares in investment funds are advised to read the current fund prospectus(es) and the Information for Investors pursuant to § 21 AIFMG, especially the risk notices they contain, before making an investment decision.

Please consult the corresponding information in the fund prospectus and the Information for Investors pursuant to § 21 AIFMG for restrictions on the sale of fund shares to American citizens. Misprints and errors excepted.

 

DISCLAIMER FOR THE SALE of non-US funds to US investors

Limitations on Sale

The shares issued for this Investment Fund may only be publicly offered or sold in countries in which such a public offer or sale is permitted. Therefore, unless the Management Company or representatives of the Management Company have filed an application with the local supervisory authorities and permission has been granted by the local supervisory authorities, and as long as no such application has been filed or no such permission granted by the supervisory authorities, this prospectus does not represent an offer to buy investment shares.

The shares have not been and will not be registered pursuant to the 1933 United States Securities Act as amended (hereinafter the "Securities Act of 1933") or pursuant to the securities regulations of a state or other public entity of the United States of America or its territories, possessions or other areas subject to its sovereignty, including the Commonwealth of Puerto Rico (hereinafter collectively designated as the "United States").

The shares may not be publicly offered, sold, or otherwise transferred in the United States. The shares are being offered and sold on the basis of an exemption from registration pursuant to Regulation S of the Securities Act of 1933. The Management Company and the Investment Fund have not been and will not be registered pursuant to the 1940 United States Investment Company Act as amended, or pursuant to any other US federal laws. Therefore, the shares will not be publicly offered or sold in the United States or to or for the account of US citizens (in the sense of the definition for the purposes of US federal laws governing securities, goods, and taxes, including Regulation S of the United States Securities Act of 1933 – hereinafter collectively referred to as "US citizens"). Subsequent transfers of shares to the United States or to US citizens are prohibited.

The shares have not been admitted for sale or public offering by the US Securities and Exchange Commission (hereinafter designated as the "SEC") or any other supervisory authority in the United States, and no application for admittance for sale or public offering has been rejected by the SEC or any other supervisory authority in the United States; furthermore, neither the SEC nor any other supervisory authority in the United States has released an opinion on the correctness and appropriateness of this prospectus or the advantages of the fund shares. The United States Commodity Futures Trading Commission has neither examined nor approved this document or any other sales documents for the Management Company or the Investment Fund.

No party is authorised to provide information or make assurances that are not contained in the prospectus or in the documents referred to in the prospectus. These documents are available to the public at the domicile of the Management Company.

This prospectus may not be circulated in the United States.

Investors who are Restricted Persons pursuant to US Regulation No. 2790 of the National Association of Securities Dealers (NASD 2790) must immediately report any investments in funds from the Management Company.