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Q & A: Open call for tenders for the management of the investment portfolio of the European University Institute's Pension Reserve Fund

Question #1:

Is the column “Observations” of Annex II- D (Technical offer) dedicated to EUI?

Answer:

The purpose of the column Observations in the document Annex II D is to identify the document and page number(s) in the cases where the tenderer sent additional and/or supporting information for Annex II D (Technical offer).

Question #2:

Should the answers to Annex II- D (Technical offer) be provided only with the completion of the excel file “RFP Template”?

Answer:

The purpose of the excel file RFP Template  is to reflect the content of the Technical offer. Therefore the content of the Technical offer (document in word) and the content of the excel file should essentially be equal. In the cases, like the one in reference, where the data is going to be provided only in the excel file(s), a mention in the column Observations can be made.

Question #3:

For points 1.6 and 1.7 (Annex II – Technical offer) should the answers refer only to Italian assets under management as per 1.5?

Answer:

The information requested in points 1.5 / 1.6 / and 1. 7 from document Annex II D – Technical offer is not limited to Italian assets. The purpose of the data requested in Annex II is to evaluate the asset manager globally.

Question #4:

For points 1.10 (Annex II – Technical offer) should the depositary bank be proposed by the asset manager?

Answer:

Yes. The depositary bank should be proposed by the asset manager.

Question #5:

For points 2.9 (Annex II – Technical offer) should an answer be given if the proposed portfolio does not include hedge funds or UCITS III long/short?

Answer:

The financial instruments are merely indicative. In case the asset manager portfolio does not include them, the technical offer can be send without data concerning hedge funds or UCITS III long/short.

Question #6:

For points 2.10 and 3.6 (Annex II – Technical offer) does “Third parties product” definition include ETF and close-end Real Estate funds?

Answer:

The “Third parties product” definition include ETF and close-end Real Estate funds and a specific reference to their use can be made. The multimanager platform is merely indicative. In case the asset manager does not use the mentioned platform  a reference to the one used can be made.

Question #7:

What are the differences between points 2.1-2.2 and 3.1-3.2 (Annex II – Technical offer) in case of an unique Total Return approach?

Answer:

Point 2.1 is more related to process structure, point 2.2 on style (value, long term trend, momentum, thematic). Points 3.1 and 3.2 are related to portfolio managed on a total return basis. 

Question #8:

For point 3.9 (Annex II – Technical offer) should the answer be given by completing the excel file “Track-record”  referring only to the 11 years 2006-2016 or providing daily-weekly-monthly figures (rebased at 100)?

Answer:

The tenderers  can provide the longest and most detailed track record they have (daily, weekly or monthly).

Question #9:

Regarding the document Annex I – Tender Specifications, can the fund with the ISIN XXXX be considered in the portfolio investment?

Answer:

The characteristics of the mandate must comply with the investment directives of the European University Institute, approved by the High Council, and that are expressed on the Annex I - Tender Specifications. The overall portfolio, considering the full look through that must be available on a monthly basis and must be compliant with the mandate. The reason for the use of a fund for a significant part of the portfolio should be clear and it must be used in a way that double fees are absent.

Question #10:

Is the call for tender for a UNIQUE portfolio (Bond +  Equity max 30%) and not in two different mandates ( 100% bond & 100% Equity + Alternative)?

Answer:

Yes. The portfolio must be an unique portfolio.

Question #11:

Information on the name of the Institute’s financial advisor for issues related to the valuation of all the business propositions of the call for tender.

Answer:

It’s not possible to disclose that information. All contacts with the Institute for the purpose of this call for tender are limited to the dispositions of point 8 of the Invitation Letter to Tender. The answers to the questions arising in this phase will be communicated on the same date to all interested Tenderers through the publication of the Questions and Answers (Q&A) in the Institute’s webpage (www.eui.eu/About/Tenders/Index.aspx)

Question #12:

Is it possible to know the actual fee structures of the mandate/mandates presently in place?

Answer:

It’s not possible to disclose that information.

Question #13:

Is it possible to see the track record of the mandate/mandates presently in place?

Answer:

It’s not possible to disclose that information.

Question #14:

Possibility to provide the benchmark of the actual mandate (in other words performance vs benchmark YoY from 2010 to date).

Answer:

It’s not possible to disclose that information.

Question #15:

With how many managers will the Institute sign contracts?

Answer:

The Institute will sign contracts with one or two managers.

Question #16:

Is it possible to submit proposals which are bound by a minimum threshold in terms of AUM?

Answer:

Yes. It is.

Question #17:

Possibility to have the tender documents available in Italian language.

Answer:

The tender documents are only available in English.

Question #18:

Is it permitted to propose a depositary bank belonging to the asset manager group?

Answer:

Yes.

Question #19:

Possibility of providing an anti-mafia self-certification or equivalent certification template in English.

Answer:

No specific template in English can be provided by the Institute concerning an anti-mafia self-certification or equivalent certification.The Institute will accept a signed document where the tenderer’s legal representative declares he/she is not in one of the situations indicated by art. 67 D.Lgs. n. 159/2011, Codice delle leggi antimafia (i.e. “nei propri confronti non sussistono le cause di divieto, di decadenza o di sospensione previste dall’art. 67 del D.Lgs. n. 159/2011 e successive modificazioni ed integrazioni e di non essere a conoscenza dell'esistenza di tali cause nei confronti dei soggetti indicati nell’art. 85 del D.Lgs. n. 159/2011 e successive modifiche e integrazioni”), and that he/she is aware of the consequences he/she might face in case of providing a false declaration, as punished by the law of Italy as established by art. 75 and 76 DPR n. 445/00, Testo unico delle disposizioni legislative e regolamentari in materia di documentazione amministrativa.

Question #20:

Clarification on the content of the Envelope 1 concerning point d) of Invitation to Tender Letter: Copies of the Invitation to Tender Letter, of the Tender Specifications (Annex I) and of the Draft Contract, without any additions, amendments or changes, initialed on each page and bearing the Tenderer's stamp and full signature of the owner or Legal Representative on the last page.

Answer:

In this phase of the process, the tender is required to send copies of the Invitation to Tender Letter, of the Tender Specifications (Annex I) and of the Draft Contract exactly as published and available in www.eui.eu/About/Tenders/Index.aspxinitialed on each page and bearing the Tenderer's stamp and full signature of the owner or Legal Representative on the last page. The signature of the final contract will take place in a later stage of the procurement process.

Question #21:

For non Italian entities what document can be provided for replacing an Anti-Mafia self certification or equivalent certification?

Answer:

If the law applicable in the country of the entity foresees such kind of certification a self certification in compliance with the legal requirements of the country should be provided. If not, for non Italian entities, the Institute will accept a declaration stating that such legal requirement is not applicable.

Question #22:

Regarding the track record, is it possible to submit a composite of different mandates?

Answer:

Yes, if the composite is a strategy that can be implemented in a single portfolio coherent with the mandate. The total return track record series of the composite should be computed by the candidate. When comparing the track records (provided by candidates on a daily, weekly or monthly basis), the data will be considered on end of period monthly data. The track records must be provided as long as possible by the candidates.

Question #23:

Concerning article 4 of the document Tender Specifications (Annex I) is the minimum duration of 1 year referred to the possible need of the funds in that timeframe or it is to be interpreted as a yearly portfolio monitoring need (this question is connected to capital losses limit need highlighted in article 6 of 3 years, to capital preservation need of 5 years in article 9 and to portfolio duration indication of article 12).

Answer:

The duration indicated in article 4 of the Tender Specifications (Annex I) is to be interpreted as the duration of contract through which the mandate to manage the portfolio is conferred to the contractor by the contracting authority. In particular, duration shall be regulated by Article I.2 – Entry into force and duration of the Draft Service contract document.

Question #24:

Concerning article 4 of the document Tender Specifications (Annex I) can you specify the High Council definition of “Total Return mandate” and to provide the High Council Decision n. 6/2013?

Answer:

The term Total return mandate is to be interpreted as a mandate with no market-based benchmark. The CPI reference and the risk limits must be interpreted as the main guidelines for the investment process.As for the High Council Decision n. 6/2013, its content is mainly reflected in articles 9, 10, 11, 12, 13 and 14 of the Tender Specifications.

Question #25:

Request for clarifications on article 10 of the document Tender Specifications (Annex I):a) Point c): can the limit of 0.5% in investment in single hedge fund be waived as exception?b) Point e): is British pound included in the term other currencies?c) Point f): considering the current market environment characterized by unprecedented low interest rate, a 30% restriction over the maximum exposure to the stock market may limit the possibility to reach the investment objective indicated on the previous articles. Please clarify if the 30% restriction on the invested in stocks and shares with a risk level similar to the stock markets represents a maximum boundary to the effective equity allocation or it is an indicative guideline on the overall portfolio allocation;d) Point f): clarification of the definition for “hedge fund”. 

Answer:

Article 10 of the document Tender Specifications (Annex I):a) Point c): No. There are no exception for this limit. The compliance with the investment guidelines settled by the High Council is a permanent and mandatory requirement. However, as foreseen in article 6, the investment directives can be revised.b) Point e): Yes. The British pound is considered in the term other currencies.c) Point f): The limit is a maximum boundary. The actual market conditions are characterized by low or negative interest rates, but this does not need to translate in a strategically higher risk for the portfolio. When setting the economic offer the candidates, knowing the potential and style of their specific investment process, can focus more on recurring fees or performance fees.d) Point f): Hedge fund is a non-ucits compliant vehicle. The so-called "alternative ucits" are not considered hedge funds.

Question #26:

Concerning article 9, point c) of the document Tender Specifications (Annex I) could you please clarify whether the assets should be deposited in an independent custodian bank directly under the name of European University Institute or whether they could be deposited under the name of the “investment manager/sub-account European University Institute”?

Answer:

Both alternatives are acceptable.

Question #27:

What are the Institute's tax privileges to be taken into consideration when assigning the assets in the portfolio (reference of article 9 of document Tender Specifications).

Answer:

As established in article II.12 (Protocol on the privileges and immunities of the European University Institute) of the Draft Contract, The EUI is, as a rule, exempt from payment of Value Added Tax (VAT) pursuant to Article 151, para 1 (b) and para 2 of Council Directive 2006/112/EC, as last amended by Council Directive 2009/162/UE. This exemption applies to goods imported and services provided for the Institute’s official activities for amounts exceeding €300.00 (three hundred/00).

The EUI is exempt from customs duties and direct taxes within the terms of Articles 4 and 5 of the "Protocol on the Privileges and Immunities of the European University Institute".

The contractor shall accordingly complete the necessary formalities with the relevant authorities to ensure that supplies and services required for the performance of the contract are exempt from taxes and duties, including VAT exemption.

Question #28:

Which taxation regime is applicable to the European University Institute under the current Italian fiscal legislation?

Answer:

As established in article II.12 (Protocol on the privileges and immunities of the European University Institute) of the Draft Contract, The EUI is, as a rule, exempt from payment of Value Added Tax (VAT) pursuant to Article 151, para 1 (b) and para 2 of Council Directive 2006/112/EC, as last amended by Council Directive 2009/162/UE. This exemption applies to goods imported and services provided for the Institute’s official activities for amounts exceeding €300.00 (three hundred/00).

The EUI is exempt from customs duties and direct taxes within the terms of Articles 4 and 5 of the "Protocol on the Privileges and Immunities of the European University Institute".

The contractor shall accordingly complete the necessary formalities with the relevant authorities to ensure that supplies and services required for the performance of the contract are exempt from taxes and duties, including VAT exemption.

Question #29:

With reference to article I.4.2. of the Draft Service Contract is the point (d) also applicable to ETF’s (Exchange Traded Funds) if used within the same mandate?

Answer:

Yes, point d) is also applicable to ETF’s (Exchange Traded Funds).

Question #30:

With regards to the current selection, referring to the Draft Service Contract document - Special Conditions point (d), we specifically request whether the European University Institute is willing and able to be classified as a professional investor in compliance with the prevailing Consob rulings.

Answer:

The classification of the European University Institute will follow national and/or international rules applicable and will be established in a later stage of the procurement process. Therefore, it is not a criteria considered for exclusion, selection or evaluation of the tenderers.

Question #31:

Concerning article 10 of the document Tender Specifications (Annex I) how can the High Yield limit of 5% in letter a) be consistent with the permission to use hedge funds in letter c) of the same article, if the look through of the fund will be required?

Answer:

The two limits are not in contradiction, since hedge funds can invest in a variety of asset classes. The look through of the eventual hedge funds in the portfolio should be part of a solid investment/third party fund selection process: even if for this particular instruments the ex-ante look through can be difficult, the candidate should demonstrate a solid investment process where the portfolio composition is at least estimated ex ante and monitored ex post for what concerns the major risk factors/asset class exposures.

Question #32:

Concerning article 10, point d) of the document Tender Specifications (Annex I) are OTC allowed? Can FX Forwards be considered contracted on liquid markets? In case of use of OTC inside the mutual funds or hedge funds is this an issue?

Answer:

FX forward are considered contracted on liquid mkts and can be used directly and in third party products. OTC products such as swaps and otc option are not allowed.

Question #33:

Concerning article 11, point a) of the document Tender Specifications (Annex I) can the allowed investments in below investment grade bonds be implemented only through mutual funds or ETF? 

Answer:

Sub-investment grade investments must be done with diversified vehicles (funds/ETF). The limit of single-B rating can be considered as an indication that sub-B securities in the funds/ETF used must have zero or negligible weight. 

Question #34:

Concerning article 11, point b) of the document Tender Specifications (Annex I) the currency limits based on the countries’ rating is not clear. Could you please provide a pair of examples?

Answer:

Limits on unhedged currency exposures:

EUR+USD+YEN ≥ 90% of the portfolio

Other currencies above rating B (ex EUR/USD/YEN) <10%

Emerging currencies above rating B < 5% (this enters the <10% limit above)

Other currencies below rating B: 0%

Question #35:

Regarding Annex II-C (Declaration on honour). Does the definition of the “situation considered a conflict of interest” in letter h) refer to what described in letter g)? If no, please send us further details.

Answer:

Yes. Point h) and point g) of Annex II-C (Declaration on honour) are complementary.

For any further information on conflicts of interests see art. 12 – Conflicts of interests of President Decision n. 36/2016 (Public Procurement Regulation), available for consultation at: https://www.eui.eu/About/Tenders, regulates this matter.

Question #36:

Concerning the article I.4.2 Payment of Commissions, point d) of document Draft service contract, in case of use of third party funds, will their cost contribute to increase the total/gross expense ratio of the mandate?

Answer:

The costs of third party funds/ETFs is not part of the management fees, but in case the candidates uses their own groups’ funds (ex ETF), a clear exposure of the rebates/costs of the product is expected by the candidates (draft contract I.4.2). The use and role of third party funds will be evaluated in the general assessment of the investment strategy/company structure.

Question #37:

Regarding article I.4.2 Payment of Commissions, point c) of document Draft service contract, in case of use of Group’s funds is the eventual performance commission in charge of the portfolio?

Answer:

In general the use of groups’ funds must be very transparent in terms of reasons, management fees, performance fees and eventual rebates. Performance fees paid by the Groups’ funds must be transparent but it’s not requested that they be remitted to the EUI portfolio or not. (draft contract I.4.2.c).

Question #38:

Will the % of commission be calculated on a yearly basis on top of the cost of funds or SICAVs that the Tenderer would include in the portfolio?

Answer:

The % of commission will be calculated on all the portfolio assets, with no distinction based on the use of direct securities or indirect products such as funds of SICAVs. The fees embedded in the funds/SICAVs will therefore be excluded from the computation of the management fees. If the funds/SICAV are managed by the same Group, there must be a clear explanation of which share classes are bought, how conflicts of interest are managed, eventual rebates (article I.4.2. point c) of the Draft service contract) and the rational of the choice of in-house products.

Question #39:

Regarding the points about Depositary Bank (1.10 of Technical Offer e 4 of Economic Offer) does EUI consider Custodian or Depositary Bank and in the last case what would be the relevant business activities?

Answer:

Yes. They are considered for purposes of technical and economic offer. The costs of the custodian/depositary bank should be presented in a transparent way. The candidates must express in the tender documents all the necessary details about how they are organized in terms of custodian/depositary bank (i.e. internal or outsourced).

Question #40:

Which is the correct address for the “inner envelope”, while is clear to us that it must bear also the words ‘Call for tenders – Not to be opened by the internal mail service’.

Answer:

The submission of the Tenders follows the Double envelope system.

  • The OUTER envelope must be sealed with adhesive tape and signed across the tape. The outside of the envelope must give the following information:

OP/EUI/BFA/2017/001

Budget And Financial Affairs Service

Call for tenders — Not to be opened by the internal mail service

[The name of the Tenderer]

  • The OUTER envelope must be sent to:

EUROPEAN UNIVERSITY INSTITUTE

Protocol Office

Via dei Roccettini, n. 9

50014 San Domenico di Fiesole (FI)

  • The OUTER envelope must contain the INNER envelope that must be sealed with adhesive tape and signed across the tape (if self-adhesive envelopes are used, they must be sealed with adhesive tape and the sender must sign across that tape) and must bear the following information:

Budget And Financial Affairs Service

Call for tenders — Not to be opened by the internal mail service

  • The INNER envelope must contain 4 (four) different envelopes:
    • Envelope no. 1: sealed with adhesive tape and signed across the tape, bearing on the outside the name of the Tenderer and the words “Envelope no. 1 – Administrative Documents”;
    • Envelope no. 2: sealed with adhesive tape and signed across the tape, bearing on the outside the name of the Tenderer and the words “Envelope no. 2 – Technical Offer”;
    • Envelope no. 3: sealed with adhesive tape and signed across the tape, bearing on the outside the name of the Tenderer and the words “Envelope no. 3 – Economic Offer”;
    • Envelope no. 4: sealed with adhesive tape and signed across the tape, bearing on the outside the name of the Tenderer and the words “Envelope no. 4 – Other information”.

Boxes may be used instead of envelopes if the size or weight of the documentation so requires.

Page last updated on 05 September 2017