Properly defining the terms “investment policy” and “investment strategy” becomes especially important when an ASI Manager (ZASI) applies for entry into the register of ASI managers maintained by the Polish Financial Supervision Authority (KNF). Under the provisions of the Act of May 27, 2004 on Investment Funds and the Management of Alternative Investment Funds (the “Investment Funds Act”), descriptions of the ASI’s investment policy and investment strategy are mandatory attachments to the registration application.

KNF emphasizes that these documents must be consistent in substance with both the Investment Funds Act and Regulation 231/2013. This requirement was clarified in the position paper issued by the Office of the Polish Financial Supervision Authority (UKNF) on March 5, 2018 regarding the content of investment policy and investment strategy documents for ASIs (the “Position”).

What Requirements Must These Descriptions Meet?

Although Article 70b(1) of the Investment Funds Act states that the investment policy defines how ASI assets are allocated, it does not specify how the principles of this policy should be described. The Position recommends using Article 20 of the Investment Funds Act by analogy to determine the minimum scope of information required. This is justified by the fact that ASIs are classified as alternative investment funds.

Accordingly, under Article 20, the investment policy of an ASI should define the methods for achieving the investment objective, including:

  • Types and categories of securities and other property rights that may be acquired
  • Criteria for selecting investments
  • Rules for diversification and other investment restrictions
  • Permissible levels of borrowing and loans taken by the fund

Investment Strategy Document

The assumptions of the ASI’s investment policy are further developed in the investment strategy document, which must comply with Article 5(2) of Regulation 231/2013. The minimum required content includes:

  • Main categories of assets in which the ASI may invest
  • Any industrial, geographic, or other market sectors, or specific asset classes targeted by the strategy
  • A description of the ASI’s policy on borrowing and leverage

The Position also notes that the investment strategy document may — and should — include additional provisions tailored to the specific nature of the ASI’s operations. These may include:

  • The adopted decision-making process for investment activities
  • Anticipated exit strategies from investments

Founding Documents as the Source

It is also worth recalling that, under Article 70b(2) of the Investment Funds Act, the ASI’s investment objective and the method of asset allocation — as defined in the investment policy and strategy — must originate from the ASI’s founding documents.

Source: Position of the Office of the Polish Financial Supervision Authority on the content of investment policy and strategy documents for ASIs

[https://www.knf.gov.pl/knf/pl/komponenty/img/Stanowisko_UKNF_ws_tresci_dokumentow_polityki_i_strategii_inwestycyjnej_61012.pdf].