Our transformation policy applies to the operations and decision-making of Alexander Forbes Investments Limited, including the investment committee, the investments advisory team and the investment team. This policy considers transformation aspects across three core themes: advice, investments and operations.
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We regard ourselves as a responsible corporate citizen. To this end we:
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• are a signatory of the Principles for Responsible Investing (PRI)
• are an endorser of the Code for Responsible Investing in SA (CRISA)
• subscribe to the transformation principles expressed in the Financial Sector Code (FSC) to increase
inclusion and broad-based empowerment in the financial services sector.

Purpose

The purpose of our transformation policy is in support of and an extension of our overall commitment to the transformation of the South African economy through broad-based black
economic empowerment (B-BBEE). It:
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• focuses particularly on the investment management industry
• advances the objectives of our transformation strategy through our investment activities
• guides our investment activities in support of investment companies and professionals who contribute to the growth and transformation of the South African economy

Policy statements

We recognise that we operate in the context of

an unequal and non-representative investment management landscape. Therefore, we commit to supporting initiatives that reduce these inequalities and drive diversity and inclusion to achieve broad-based representation. Importantly, we seek to do this while ensuring sustainable and superior long-term, risk-adjusted returns for clients.
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⁠Notwithstanding this mission of intent, we further commit to doing so in the best interests of our stakeholders. Accordingly, this policy will ensure the values of openness, fairness and inclusion are considered in a consistent, competitive and transparent manner in the promotion of diversity and broad-based representation.
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⁠Our policy emphasises the critical need to significantly
increase the pipeline of black (and specifically black women) investment management firms and professionals. This must be achieved within the ambit of the FSC. Our procurement process will promote fair and transparent engagement.

We will not compromise on health and safety, commercial, quality and service standards.
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⁠We scour the investment landscape to identify and support suitable candidates to achieve our transformation objectives

⁠Start-up, emerging managers and established managers

We support and identify start-up and emerging asset managers to:
• allow them to build appropriate track records
• give them access to unique investment opportunities that may otherwise be overlooked
• cultivate the next generation of transformed portfolio management and investment professional talent
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We believe that start-up and emerging asset managers have a strong ability to produce outperformance. Therefore supporting these asset managers should provide compelling outcomes for clients.
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Selection criteria for start-ups
• Have a track record not exceeding five years at appointment
• Assets under management < R2 billion at appointment
• Meet an acceptable manager rating, as determined by our manager research team
⁠• Demonstrate a capability to meet mandate requirements through either a track record as
a portfolio manager, or key members of an investment team who have evidenced successful
and verifiable track records with previous asset management firms
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Selection criteria for emerging managers and more
established managers
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• Have a track record not exceeding 10 years at appointment
• Assets under management < R15 billion at appointment
• Meet an acceptable manager rating, as determined by the manager research team
• Have an investment style or factor exposure, and a competitive advantage that is required in our asset allocation, strategy selection, manager selection and ongoing monitoring activities
• Have a B-BBEE Level 2 contributor status

⁠Asset managers

These are asset managers who:
• have existing contractual agreements for assets under management allocations in our portfolios
• may be included within portfolio recommendations for Investments advisory clients
• could qualify based on the investment team and operational due diligence processes
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Selection criteria for asset managers
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• Attain a minimum B-BBEE Level 3 contributor status, which must be achieved within a three-year phased improvement of FSC scorecard points
• Achieve a minimum 40% representation of black investment professionals of whom 40% of their total investment (16% of total) must be black women investment professionals
• Achieve a minimum 40% representation by black individuals in senior management within a threeyear phased improvement of FSC scorecard points
• Improvement expected year on year
• At the date of implementation, asset managers who do not meet the above targets are to provide a three-year plan to achieve them. These plans will be monitored every year
• A change to a lower B-BBEE contributor status will prompt a review and possible withdrawal of the asset manager research value and support provided, leading to partial or complete
termination

⁠⁠Stockbrokers

We require asset managers who have existing
contractual agreements in our portfolios to allocate
an increasing portion of their brokerage services to
black-owned stockbroking businesses, considering the
principles of best execution, value-added services and
data to benefit the client.
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We will allocate and direct our own brokerage to blackowned stockbrokers by:
• allocating 15% to black-owned stockbroking
businesses within the first year
• increasing the allocation to 30% within three years,
and
• increasing it to at least 40% within five years
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A stockbroker is defined as black-owned if it has:
• 51% black ownership
• a minimum of 50% black representation at board
level and senior management level

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⁠Enterprise and supplier development

We recognise that the future of employment and economic growth is dependent on small and medium enterprises (SMEs), particularly in South Africa, where SMEs are expected to create 90% of new jobs by 2030.
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Enterprise and supplier development (ESD) is increasingly becoming a focus for transformation since it can:
• have a significant impact on broader socioeconomic development
• enable sharing of value within a company’s
operational ecosystem
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We are committed to growing SMEs for measurable and meaningful socio-economic impact to aid progress towards sustainable and inclusive economic growth. To this end, we allocate a portion of our annual profits towards investment into SME suppliers.
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Under our transformation policy, we only consider suppliers classified as start-up and emerging for inclusion into the black asset manager ESD programme.
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Qualifying criteria for enterprise and supplier
development
• A B-BEE Level 2 contributor status, with a one- and three-year phased improvement of FSC scorecard points
• Preference will be given to entities that have black ownership of at least 51% or black women ownership of at least 30%
• Entities to maintain or improve their status during the duration of their selection in the programme
• A change in status resulting in dropping a level will result in a review and possible withdrawal
of support. A partial or complete withdrawal will occur in this instance
• Qualifying entities must meet the investment and operational due diligence framework and
processes where appropriate
• We will conduct a review throughout the programme of:
– B-BBEE status
– performance
– value and impact created
• The review will be based on defined and articulated elements in the contracting phase in
key performance indicators and associated metrics
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⁠Disclaimer

Alexander Forbes Investments Limited is a licensed financial services provider, in terms of section 8 of the Financial Advisory and Intermediary Services Act 37 of 2002, as amended,
FAIS licence number 711, and is a registered insurer licensed to conduct life insurance business. This information is not advice, as defined and contemplated in the Financial Advisory and Intermediary Services Act 37 of 2002, as amended. The value of a portfolio can go down, as well as up, as a result of changes in the value of the underlying investments, or
of currency movement. An investor may not recoup the full amount invested. All policies issued or underwritten by us are linked policies under which no guarantees are issued. The
policy benefits are determined solely on the value of the assets, or categories of assets, to which the policies are linked. Past performance is not necessarily an indication of future
performance. Forecasts and examples are for illustrative purposes only and are not guaranteed to occur. Any projections contained in the information are estimates only. Such
projections are subject to market influences and contingent upon matters outside our control, so may not be realised in the future. Please be advised that there may be supervised
representatives.
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Company registration number: 1997/000595/06
Pension Fund Administrator number: 24/217
Insurer number: 10/10/1/155
Postal address: PO Box 786055, Sandton 2146
Physical address: 115 West Street, Sandown 2196
Telephone number: +27 (0) 11 505 6000
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The complaints handling procedure and conflict of interest management policy can be found on our website: www.alexforbes.com