Investment policy

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Vive's investment beliefs

Vive wants you to be able to achieve your goals through your investments. The investments and investment portfolios are at the service of achieving your financial goals. Vive's asset management to private clients provides the desired investments with an efficient ratio between return and risk, at low costs, in a transparent manner and taking into account widely accepted ESG criteria (i.e. in the areas of living environment, social relationships and good corporate governance).

Sustainability policy

At Vive, investing goes beyond just financial aspects. Vive includes sustainability criteria in its selection policy. In doing so, Vive strives to select investment funds and managers that excel in their category when it comes to sustainability. This involves a two-way approach to sustainability.

Sustainability risks (outside-in): Vive analyses environmental, social and governance (ESG) sustainability risks that can affect investments. We include these in our investment process to make better choices and strengthen our portfolios.

Sustainability impact (inside-out): Vive does not have a goal for sustainable investments but promotes social characteristics through its selection policy. Vive does this based on the frameworks of the Sustainable Finance Disclosure Regulation (SFDR), the European legislation that promotes transparency around sustainability.

Vive selects investment funds based on a selection policy that takes into account sustainable characteristics, with the aim of a balanced risk-return ratio. The sustainability selection criteria are based on the following principles:

1. Exclusion policy

Vive only invests in funds that exclude investments based on a structured policy, within the asset class where possible.

2. Best-in-Class Selection

We only select funds that excel in sustainability:

• At least one BBB's MSCI ESG Rating, to reduce sustainability risks.
• At least one SFDR article 8 classification (preference for article 9).
  This requirement is not applied by default to government bonds.

3. Voting Rights and Engagement

For equity funds, we only invest in funds that actively use their voting rights and encourage companies to behave more sustainably.

4. Social Features

Vive promotes social values such as:

• No investments in controversial weapons.
• Limiting investments in the tobacco industry
• Respect for human rights, labour rights and combating corruption according to the UN Global Compact.

With this policy, we ensure that our investments are not only financially strong, but also contribute to social and sustainable goals, in line with changing laws and regulations. See it Vive Sustainability Policy and the SFDR documents for more information.

Diversifying risks and keeping costs low are important

Vive believes that investing is best done with widely diversified portfolios. Vive strives to spread as much as possible across asset classes, and within them across geographical regions and sectors. Avoidable risk that is not rewarded with a positive expected risk premium (more return above the risk-free rate) should in principle be avoided.

Vive does not believe that market timing and tactical asset allocation add value to the customer after deduction of costs. Vive does not believe that trying to beat the market structurally adds value for the customer after deducting costs. With active management, it is very difficult to do better than the market average. That is why the policy is to select funds on the basis of “passive where possible”. Vive believes that active management makes sense for less efficient or inefficient markets if it leads to better risk management. Vive's focus in portfolio management is on the best possible composition of portfolios per risk level based on realistic and plausible (long-term) economic scenarios. Clients' investment horizons range from short to long term. With the help of outsourcing to external asset managers, i.e. the suppliers of unlisted investment funds in which Vive invests for its customers, Vive can focus on the added value for you as a customer. Vive can select the investment funds itself. Vive only invests through unlisted UCITS in the selected asset classes.

Focus on risk management

Risk management is crucial for sustainable asset management. This means that the risk is measured frequently and that the portfolio is adjusted if necessary. Vive uses the principle that the downside risk value of the optimal portfolios is updated quarterly and that the composition of the optimal portfolios can be adjusted accordingly to achieve the best ratio between expected return and downside risk. To ensure that clients' investment plans remain close to the intended risk profile, Vive monitors your investment portfolios daily and Vive rebalances the portfolios if they differ too much from that risk profile. The actual composition is then brought into line with the strategic portfolio associated with the investment plan at the time of rebalancing.

In which asset classes is the money invested?

The asset classes that qualify for the optimal portfolio should have a positive expected risk premium that is scientifically based.

Based on its investment beliefs, Vive can fill the portfolios with the following asset classes:

• Money market investments in euros;
• Government loans in euros or hedged to the euro;
• Investment Grade business loans in euro or hedged to the euro;
• Global, mature and emerging markets stocks;
• High Yield business loans, i.e. business loans with lower credit quality than Investment Grade class.

Vive determines a representative index series for each category, which is used to determine the statistical characteristics in Vive Technology's Economic Scenario Generator model. These characteristics determine the degree of risk diversification across categories.

How does Vive select funds for each asset class?

Vive offers asset management by investing in unlisted investment funds (“funds”). Vive does not invest in its own funds but uses third-party funds; this prevents an unwanted conflict of interest.

Vive selects third-party funds based on the following criteria:

Liquid: The portfolio is set up with unlisted open-end investment funds that can be traded on a daily basis.

High degree of risk diversification: There is a wide range within the fund: there are sufficient names in each investment fund and it is ensured that no individual investment has too large an allocation within the fund, both in terms of euro and risk weight. This is tested by applying a 5% worst case scenario to the two largest positions in the portfolio and checking that it does not exceed the Value at Risk of the asset class in question. If exceeded, the fund does not meet the risk diversification criterion and is not eligible for selection.

Low costs: The running cost factor (OCF) must be low. This is tested by comparing the OCF of a fund to be selected with the median of the OCF of comparable funds. The amount of any entry fee or exit allowance must be in line with the market.

Sustainability criteria: Vive only invests in funds that meet our sustainability criteria (see above for more information).

Appropriate mandate of the instrument: The fund's benchmark is reasonably in line with the representative index series on which the statistical characteristics are based; the tracking error between the two indices is not expected to exceed 1%. This is about two index series. The index series on which the statistical characteristics are based refers to the index series used to determine the parameters in the Economic Scenario Generator model. The other index series, from the benchmark, concerns the fund's benchmark. The investment universe and risk restrictions contribute to sufficient risk diversification. With an index tracker, the replication method ensures a good connection to the benchmark (for example, full replication). The fund's management style is passive and responsible where possible.

Good quality asset manager: The asset manager has a proven track record (i.e. has demonstrated that asset management in the respective asset class is carried out reliably), has its own risk management in order and has a stable organization. Vive specifically sets an AFM registration of the fund manager and the fund as a criterion. In addition, the fund must have a reliable depositary.

Suitable and permitted for retail investors within the European Union: The fund has UCITS status (UCITS) and for the fund, the Key Investor Information Document (EBI, in English: KIID) is available in English and in the language of the country where Vive offers the app. This means that the EBI is available in the Dutch language for funds used for customers in the Netherlands.

Security-lending funds and unnecessary use of derivatives should be avoided: Vive strongly prefers funds without securities lending and without the use of derivatives (such as total return swaps). Vive considers adding counterparty risk by lending securities undesirable, because this is not a transparent source of risk for the customer. The use of derivatives in a fund involves additional risks that cannot be clearly understood by retail investors. If a fund without securities lending or derivative use is not available for a specific asset class, but the improvement in the risk-reward ratio for Vive's customers is significant, Vive may still consider adding this fund. In that case, it will be specifically recorded and communicated to customers how Vive deviates from Vive's principle of lending securities and derivatives, and why Vive considers it in the interest of customers that the fund in question can be part of customer portfolios. Excluded are funds that use so-called exotics (custom derivatives).

How are investment plans made?

Vive helps clients set investment goals based on preferences that customers specify and within the customer's risk tolerance profile based on the risk acceptance expressed by the customer. Through a software-defined procedure, an optimal investment strategy is then derived for each target plan. This strategy is a so-called lifecycle strategy: the “investment risk decreases as the end date approaches”.

Vive determines an optimal investment portfolio within the client's risk profile. Vive ensures portfolio optimization and rebalancing after adjusting the risk-return characteristics of the underlying asset classes. The optimal portfolios and forecasts for the median scenario and the bad weather scenario are based on an economic scenario set that is generated quarterly by the Economic Scenario Generator model.

The investment plans are executed by investing for each investment plan in an optimal portfolio corresponding to the level of risk that the client accepted when preparing the plan (or last revision of the plan). Vive uses the same consistent portfolio optimization to fill in the investment mix in the different types of investment plans.

Portfolio optimization with the eligible asset classes takes place by choosing the portfolio with the highest expected return (median scenario) at any desired Value-at-Risk (VaR) level based on a realistic 1-year scenario. Vive uses a robust optimization technique to minimize the impact of extreme anomalies. The VAR level is determined as the 5% percentile of the probability distribution of portfolio returns.

Vive's services include rebalancing the portfolios in the investment plans created by the customer. Differences between the actual portfolio and the strategic portfolio for the customer's investment plan may arise due to price developments and changes in the strategic portfolio. The purpose of rebalancing is to align the actual portfolio with the strategic portfolio that currently accompanies the specific investment plan.

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