Principles for avoiding conflicts of interests

At an investment company that offers its clients a wide range of securities services, conflicts of interest cannot always be ruled out. Therefore, as prescribed by Article 27 of the German Investment Act (KAGB), the Company herewith informs you about the extensive measures it undertakes to deal with such conflicts of interest in the field of asset management and when managing securities funds and real estate funds.


Conflicts of interest can arise, for example, between MEAG MUNICH ERGO Kapitalanlagegesellschaft mbH ("the Company"), other companies of Munich Re Group, the Company's management, staff or other persons affiliated to the Company, its clients or between the clients themselves.


Organisational measures in the event of conflicts of interests:


In order to counteract potential conflicts of interest before they arise, the Company took care to ensure separation of functions when structuring its organisation, especially functions that are incompatible with each other. The principle of keeping functions separate applies all the way up to Management Board level. The Company also has a compliance instance to identify, prevent and manage conflicts of interest. This instance has been moved out of the Company and is now based in MEAG MUNICH ERGO AssetManagement GmbH.


The Company also obliges its staff to observe high ethical standards. It expects the greatest of care and integrity at all times, lawful and professional conduct, the upholding of market standards and especially observance of the clients' best interests.


Despite these organisational precautions, the following conflicts of interest can arise within the organisational units and at process interfaces:


  • When receiving inducements from third parties in the form of gifts, dining invitations or travel in the context of offering securities services;
  • From predominantly success-related remuneration of employees;
  • When obtaining information not yet publicly known (insider information);
  • From personal relationships of employees or management or people related to or acquainted with them;
  • When these persons are active in supervisory boards or other advisory bodies;
  • Due to the Company's membership in the company group vis-à-vis clients;
  • In transactions between funds managed by the Company and individual portfolios (cross trades);
  • When regrouping investments in the funds or;
  • When clients have identical interests (e.g. fund asset management) in buying or selling a certain property;
  • When clients have identical interests in purchasing a share of investment projects;
  • When grouping together similar buy/sell orders (block trades);
  • Investors can secure advantages over other investors by attempting to conclude transactions in fund units at known unit prices.


We counteract or prevent these potential conflicts as follows:

  • By ensuring that the Rules of Good Conduct/Code of Conduct and organisational guidelines are upheld;
  • By keeping a watch list to counter possible conflicts of interest, for example by prohibiting certain transactions;
  • With provisions that cover the acceptance and granting of benefits and their disclosure (e.g. value limit for gifts of EUR 40.00/prohibiting the acceptance of travel invitations, etc.;
  • By not remunerating employees predominantly through bonuses;
  • By creating areas of confidentiality by erecting information barriers, separating responsibilities and/or through spatial separation (Chinese walls);
  • By keeping insider and observation lists that monitor the emergence of sensitive information and prevent the misuse of insider information;
  • By disclosing to the Compliance Office securities transactions of employees who may be confronted with conflicts of interest within the course of their work;
  • By ensuring that investors' best interests are served by when delegating tasks;
  • By monitoring the portfolio turnover rate;
  • By ensuring a controlled selection process when acquiring real property, under the supervision of compliance/MiFID officers:
  • Through pro-rata reductions of participations in investment projects in the event of an allocation that is lower than the offers submitted, and organisationally ensuring a fair flow of information between the project participants;
  • By checking for conflicts of interest when designing new products;
  • By regulating dealings with block trades;
  • By dictating order cut-off times to custodians, to prevent the possibility of investors gaining advantages over other investors by knowing unit prices;
  • By regularly training the staff in matters of compliance.


The Company points out the following:


Portfolio management


In the field of portfolio management, the Company's clients have delegated the management of their assets, and thus the authority to make decisions regarding the sale and purchase of financial instruments, to their asset manager. This means that within the scope of the agreed mandates, the Company makes decisions on sales and purchases without gaining the client's prior consent. This can intensify any existing conflict of interest. The Company counters risks that may result from this with organisational measures (see above), and in particular by choosing investments that serve the interests of the individual client. In this way it can ensure that when selecting the financial instruments, the returns, the continuity of the portfolio management and conformity with the investment objectives agreed upon together with the client are focused upon.