Absolute Return Investment Advisers (ARIA) Limited (the “Firm”) was incorporated with limited liability in England and Wales on 01 December 2009 and is authorised and regulated by the Financial Conduct Authority (the “FCA”). The Firm acts as discretionary portfolio manager to retail and professional clients and has been appointed as an investment manager and investment adviser for a number of collective investment schemes (“the Funds”).

Pillar 3 disclosures fulfils the Firm’s obligation to disclose to market participants key pieces of information on a firm’s capital, risk exposures and risk assessment processes.
The Firm is categorised as a limited licence firm by the FCA for capital purposes.

I.RISK MANAGEMENT OBJECTIVES AND POLICIES

The Directors of the Firm determine its business strategy and the risk appetite. In conjunction with the COO, they have designed and implemented a risk management framework that recognizes the risks that the business faces. The Directors also determine how such risks may be mitigated and assess on an on-going basis the controls and procedures in place to manage those risks. The Directors and COO meet on a regular basis and discuss projections for profitability, liquidity, regulatory capital, business planning and risk management.

As an investment manager, the Firm considers the following as key risks to its business:

Business risk – This risk represents a fall in asset under management in the Funds, or the termination of portfolio management mandates, which may reduce the fee income earned by the Firm and therefore hinder its ability to finance its operations and reimburse its expenses. Business risks are assessed and mitigated as part of the Internal Capital Adequacy Assessment Process (”ICAAP”).

Operational risk – This risk covers a range of operational exposures from risk of trading errors to risk of breach of a Fund’s or Model Portfolios investment objectives. Legal and reputational risks are also included within the category of operational risk. Operational risks and mitigants are assessed as part of the ICAAP.

Credit risk – This risk relates to the exposure to the Funds for non-payment of management and performance fees and counterparty exposure relating to the Firm’s bank balances and any other debtors. This is monitored by the COO and reported quarterly to the Directors.

Market risk – The risk is the exposure to foreign exchange fluctuations due to investment management and performance fees being denominated in currencies other than sterling. The Firms fees are predominantly paid in sterling.

II.CAPITAL RESOURCES

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:
1.a base capital requirement of Euro 125,00;
2.the sum of market and credit risk requirements; and
3.the Fixed Overhead Requirement (“FOR”).

Pillar 2 capital is calculated by the Firm 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.

The capital resources of the business comprises Tier 1 capital with no deductions.

It is the Firm’s experience that its capital requirement normally consists of the FOR, as although market and credit risks are reviewed regularly the Firms exposure to such risks is limited. The COO monitors expenditure on a regular basis and takes into account any material fluctuations in order to determine whether the FOR remains appropriate to the size and nature of the business or whether any adjustment needs to be made during the year.

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

III. MANAGEMENT OF THE ICAAP

The approach of the Firm to assessing the adequacy of its internal capital to support current and future activities is contained in the ICAAP. This process includes an assessment of the specific risks to the Firm and the internal controls in place to mitigate those risks. Finally, an assessment is made of the probability of occurrence and the potential impact, in order to arrive at a level of required capital, as relevant. The Firm stress tests future impact by considering a number of different scenarios, its breakeven point, and, in order to address the worst case scenario, the costs to close.

The Firm’s ICAAP is formally reviewed by the Directors at least once per annum but will be revised should there be any material changes to the Firm’s business or risk profile.

IV. REMUNERATION CODE

The Firm is subject to FCA Rules on remuneration contained in the FCA’s Remuneration Code located within the SYSC Sourcebook of the FCA’s Handbook.

The Firm has implemented a Remuneration Policy (“the Policy”), which covers an individual’s total remuneration, fixed and variable, to ensure that it complies with the regulators requirements and to ensure its employment remuneration arrangement promote effective risk management and do not encourage excessive risk taking.

The Firm falls within the FCA’s fourth proportionality tier and as such this disclosure is made in line with the requirements for a Tier 4 Firm.

1. Summary of information on the decision-making process used for determining the firm’s remuneration policy including use of external benchmarking consultants where relevant.

The Firms board of directors have approved the Policy based on the principles laid down by the FCA. The Policy will be reviewed in accordance with the Firms compliance monitoring programme on an annual basis or where a significant change to the business occurs which requires an update to the Firms ICAAP.

The Firm has not currently appointed an independent remuneration committee due to its size and the nature of the business.

2. Summary of how the firm links between pay and performance.

Individuals are rewarded based on their contribution to the business. This reward is in the form of a discretionary payment which is approved by the Board taking into consideration factors such as performance, reliability and business contribution.

3. Aggregate quantitative info on remuneration broken down by significant business division (where such business divisions exist).

Due to there being only one business area within the firm it is not possible for the aggregate to be broken down.

4. Aggregate quantitative information on remuneration, for staff whose actions have a material impact on the risk profile of the firm.

The Firm has identified current members of staff who satisfy the definition of “Code Staff “and informed them of what this entails. The aggregate level of remuneration earned by such staff is disclosed in the audited financial statements.

Such disclosure may be omitted where the Directors feel that the information could be regarded as prejudicial to transposition of Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data.

ARIA Capital Management is a trading name of Absolute Return Investment Advisers (ARIA) Limited. Office: Ground Floor, 2 Bell Court, Leapale Lane, Guildford GU1 4LY. Absolute Return Investment Advisers (ARIA) Ltd is authorised and regulated by the Financial Conduct Authority.
 
The information on this site is issued by ARIA CAPITAL MANAGEMENT. ‘ARIA’ and ‘ARIA CAPITAL MANAGEMENT’ are TRADING NAMES of ABSOLUTE RETURN INVESTMENT ADVISERS (ARIA) Limited, who are authorised and regulated by the Financial Conduct Authority in the UK, with Firm Reference number 527557. A Limited Company registered in England and Wales No: 7091239. Contact Address: Ground Floor, 2 Bell Court, Leapale Lane, Guildford GU1 4LY. Telephone: +44 (0)203 137 3840 The information on this site is directed only at persons or entities in any jurisdiction or country where such access to information contained herein and use thereof is not contrary to local law or regulation. In particular, the information on this site is not directed at any person in the United States and this site is not intended to be used by any person in the United States. Accordingly, all persons who access this site are required to inform themselves of and to comply with any such restrictions. Sales Restrictions United Kingdom: there are funds referred to on this site, which are not recognised collective investment schemes for the purposes of the Financial Services and Markets Act 2000 of the United Kingdom (the 'Act'). The promotion of such investment funds and the distribution of offering materials in relation to such funds in the United Kingdom are accordingly restricted by law. The information contained on the restricted part of this site (the 'Intermediary Centre') is directed only at persons to whom such investment funds may lawfully be promoted by a person authorised under the Act (an 'authorised person') by virtue of Section 238(5) of the Act and Chapter 4 (part 12) of the FCA New Conduct of Business Sourcebook. Investors in the investment funds referred to in the Restricted Area will not benefit from the rules and regulations made under the Act for the protection of investors, nor from the Financial Services Compensation Scheme. Shares in the investment funds referred to in the Intermediary Centre are not dealt in or on a recognised or designated investment exchange for the purposes of the Act, nor is there a market maker in such shares, and it may therefore be difficult for an investor to dispose of his shares otherwise than by way of redemption. General: it may be illegal to access or download the information contained in this site in certain countries and ARIA disclaims all responsibility if you access or download any information from this site in breach of any law or regulation of the country in which you are residing. Access to the Intermediary Centre requires possession of a valid password and no other person should attempt to gain access to it. An application for shares in the investment funds referred to on this site should only be made having read fully the relevant prospectus and other information contained on this site. 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FRC Stewardship Code The Stewardship Code (“the Code”), which has been published by the Financial Reporting Council, sets out principles for institutional investors in relation to engagement with the companies in which they have invested. The FCA’s regulations oblige any firm which manages investments for institutional clients to publicly disclose the nature of its commitment to the Code, or where it does not commit to the Code its alternative approach. ARIA’s investment strategy, notwithstanding that this may vary depending on the mandate received from the client, is in general such that the firm does not consider it to be appropriate for it to engage directly with companies in which it invests. The scale on which the firm manages investments for institutional clients is such that engagement would not be cost-effective and appropriate for those clients. The firm does not consider that those institutional clients for whom it manages investments expect engagement.
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