Heartwood Investment Management executes orders for clients of Handelsbanken Wealth Management. Both Heartwood Investment Management and Handelsbanken Wealth Management are trading names of Heartwood Wealth Management Limited.
It is in the mutual interests of us and you that we obtain the best possible results when executing transactions on your behalf or when transmitting orders on your instruction. We are required under the rules of the FCA to take all reasonable steps to provide "best execution" when doing so and also to provide you with a copy of the policy we adopt to achieve that objective. The best possible result is determined in terms of total cost, taking into account not only the price of the financial instrument but also all expenses incurred by you, which are directly related to the execution of the order. This policy sets out how we aim to achieve the best possible result.
2. Executing orders
Subject to any specific instructions that you may give, we will take all reasonable steps to obtain the best possible result when executing orders, taking into account the factors affecting execution listed in section 3 below. We will determine the relative importance of each of these factors by using our commercial judgement and experience in light of market information available and by taking into account the execution criteria described in section 4. To ensure that the execution of sales and purchases for you are fair, comparable orders are dealt with in the order that they are received by our dealing team. Some orders may be aggregated where we have reasonable grounds to believe that this will work to the advantage of each of the clients concerned, for example by achieving a more advantageous price through benefits of scale, or by achieving processing efficiencies at no disadvantage to clients. We will not aggregate orders if we consider that this is likely to disadvantage you although the effect of aggregation may work on some occasions to your disadvantage. If we aggregate an order, the subsequent allocation will not give unfair preference to any client for whom we have dealt.
The attainment of similar end investment performance for all clients within the same investment strategy is of key importance to Heartwood Investment Management.
In the trading of investments, our overriding principal is the fair treatment of our clients. Ordinarily this will result in equal allocation of a specific transaction across all client accounts mapped to a relevant investment strategy or strategies, without favour to any particular individual client or group of clients. However, situations may arise where it is not possible to allocate across all relevant clients, either for reasons of liquidity or practicality (the de minimis principle). Similar investments may be traded differently across the strategies for a variety of reasons, including the presence or size of other holdings in a particular strategy, the number of clients within a particular strategy and the subsequent impact on liquidity/trading (e.g. it may not be practical or cost effective to place trades for a very small client base) or for prudent portfolio management.
It may be that the Heartwood-managed funds (“the Funds”) trade differently from segregated portfolios following the same investment strategy, again for a variety of reasons which may include fund size, limits on individual position sizes, type of allowable investments within the Funds or Fund cash flow. In such a situation we will seek to allocate trades in the most efficient manner possible, without favouring any specific client or portfolio, including the Funds.
3. Factors affecting execution
When executing an order we will take into account the following factors:
- likelihood of execution and settlement,
- size and nature of the order,
- market impact and
- any other consideration relevant to the execution of the order.
For Retail Clients, the best possible result will be determined in terms of the total consideration, which is determined by the price of the Financial Instrument and the costs related to execution incurred by you. Speed, likelihood of execution and settlement, the size and nature of the order, market impact and any other considerations will be given precedence over the immediate price and cost consideration only insofar as they are instrumental in delivering the best possible result in terms of the total consideration to you.
4. Execution Criteria
To assist us in determining the relative importance of each of the factors described above, we will consider the characteristics of the following criteria:
- the client (e.g. retail or professional clients),
- the order,
- the financial instruments that are the subject of that order and
- the execution venue to which an order can be directed.
5. Execution Venues
An execution venue is a firm or entity to whom we direct buy or sell orders for conclusion, for example, a market maker. A list of the execution venues that we use in respect of each class of financial instrument can be found in section 10. This list is not exhaustive but includes those venues on which we place significant reliance in meeting our obligation to obtain, consistently, the best possible execution result. We may use other execution venues or intermediaries e.g. stockbrokers where we deem it appropriate in accordance with this policy. We will regularly assess the execution venues available for any financial instruments that we trade to identify those that will enable us, consistently, to obtain the best possible results. We may add or remove execution venues from the list following such assessment. We will not notify you specifically of any changes to the list of execution venues but a current list is available on request and can be found below.
6. Selecting an Execution Venue
Subject to any specific instructions that may be given by you, we will select the execution venue that we consider the most appropriate taking into account the factors affecting execution and the execution criteria detailed above. Where there is more than one execution venue that would be appropriate, we will take into consideration our own commissions and costs for executing the order on each of the eligible execution venues. When transactions are carried out on, and reported to, a regulated exchange, for example the London Stock Exchange, they are considered to be "on-market". Certain transactions (for example most bond transactions) cannot be conducted on-market and where this is the case we will continue to operate on your behalf "off-market". However, transactions that are carried out off-market even though they could be carried out on-market require your express consent. In some circumstances, we may choose to carry out transactions off-market because we believe it is in your interests to do so. By entering into your Client Agreement you agree that we may carry out off-market transactions on your behalf. Heartwood Investment Management will only act as the execution venue where we believe that it is in the best interests of you to do so, for example, where Heartwood Investment Management matches a purchase transaction for one client with a sale transaction from another, rather than going through another execution venue.
7. Instrument Type Considerations
This instrument class includes equities, warrants and depositary receipts. All equities transactions would be executed by passing an order to a relevant and approved execution venue. These are outlined in section 11 below.
A live bid offer price is provided by a live terminal feed and this is compared against an execution venue’s quoted equity price. Dependent on the direction of trade, where the bid or offer price quoted by the execution venue is the same or better than the live bid offer price, the order is normally executed on this basis, whilst also taking into consideration the cost of the transaction.
Other execution factors are permitted to be taken into account at the discretion of the dealers as is appropriate for the type, size and nature of the relevant order. For larger orders, the dealer may choose an execution venue based on better access to the market and higher liquidity.
The dealer will on most occasions consider that price (including costs) is the most important factor. Other execution factors are permitted to be taken into account at the discretion of the relevant dealer as is appropriate for the type, size and nature of the relevant order. Heartwood Investment Management utilises a reliable screen-based quotation system, which provides at least two prices for the fixed income instrument. The dealer will in almost all cases select the best quoted price, however on occasion other execution criteria may be considered depending on the type, size and nature of the relevant order. When this system is not utilised, telephone quotes are obtained from at least two other execution venues, which are outlined in section 11 below. In circumstances where the dealer considers that speed of execution or certainty of execution are important execution factors, the dealer is permitted to deal on the basis of the prices quoted by/available on a single execution venue.
8. Specific client instructions
Where you give us a specific instruction as to the execution of an order, for example, asking us to deal through a particular broker or at a specific price, we will execute it in accordance with that instruction. Where the instruction relates to only part of the order, we will apply our order execution policy to the parts of the order not covered by your specific instructions. You should be aware that providing specific instructions may prevent us from taking the steps set out in our order execution policy to obtain the best possible result for those elements covered by those instructions.
9. Requesting a limit order
A limit order is when you instruct us to buy or sell a specific amount or number of shares in an investment at a specified price or better. When a limit order, which would usually be placed on a regulated market, cannot be immediately executed under prevailing market conditions, we are required to make that limit order public unless you instruct us not to. However, if we are required to make a limit order public we will be restricted to using only those venues who can/will make that limit order public on our behalf and these may not be the venues who can give us best execution as described in our order execution policy. Therefore by entering into your Client Agreement, you instruct us not to publicise limit orders in respect of shares admitted to trading on a regulated market which are not immediately executed under prevailing market conditions, where we consider it appropriate not to do so in accordance with the FCA rules.
10. Monitoring and review
We will review our order execution policy annually or whenever a material change occurs that affects our ability to obtain the best possible result for the execution of your orders consistently, using the execution venues included in the order execution policy. We will also monitor the effectiveness of our order execution policy regularly to identify and, where appropriate, correct any deficiencies. We will notify you of any material changes to our order execution arrangements or order execution policy.
11. List of Execution Venues
This is a list of execution venues on which Heartwood Investment Management places significant reliance in meeting its obligation to obtain on a consistent basis, the best possible execution result for our clients. This list may be subject to change, we will not notify you specifically of any changes but a current list is available on request and can always be found here on our website.
|Financial Instrument||Execution Venue|
UK & Overseas
BNYM Capital Markets
JP Morgan Cazenove
UK & Overseas
BNYM Capital Markets
Royal Bank of Canada
Royal Bank of Scotland
|Open Ended Funds||
External Fund Managers
Heartwood Wealth Management
Heartwood Wealth Management
Hedge/ Property Fund Managers
BNYM Capital Markets
Royal Bank of Scotland
12. Purchase of research
Heartwood Investment Management receives research from a number of sources for which we pay a fee. These sources include services such as High Frequency Economics, GaveKal Research and research information as part of the Bloomberg and FactSet services.
Corporate Social Responsibility
Corporate social responsibility is important to Heartwood. Along with our employees, we take a keen interest in our responsibility to the environment and the communities in which we operate.
What we think singles us out is a combination of factors:
- encouraging as much recycling as possible in our offices;
- reducing the amount of paper we waste by default printing, where possible, to double- sided;
- positively encouraging employees to think twice before printing emails;
- making use of video conferencing to help minimise business travel between our offices;
- imiting our energy consumption by, for example, ensuring that all our PCs automatically switch off at a certain time in the evening.
Although we receive a wide variety of requests for charitable donations, we focus on charities connected to the communities close to our offices. We sponsor at least one major employee-related charity event per annum and several of our Directors hold senior positions within charitable entities.