ENGAGEMENT DISCLOSURE

The EU Shareholder Rights Directive II ("SRD II") introduced various obligations concerning shareholder engagement and transparency. These obligations were implemented in the UK during 2019, with those applicable to asset managers, such as Blu Investment Management Ltd., being incorporated into the Financial Conduct Authority’s Conduct of Business Sourcebook.

Under these regulations, we are typically required to develop and publicly disclose an engagement policy that adheres to the FCA's Conduct of Business Sourcebook. We would also need to publicly report annually on how that policy has been implemented, including details of voting activities for shares in investee companies. Alternatively, we could publish a clear and reasoned explanation for not complying with these requirements. An engagement policy would typically outline how we:

Integrate shareholder engagement into our investment strategies.
Monitor investee companies on relevant matters (e.g., strategy, financial and non-financial performance and risk, capital structure, social and environmental impact, and corporate governance).
Conduct dialogues with investee companies.
Exercise voting and any other shareholder rights.
Cooperate with other shareholders.
Communicate with relevant stakeholders of investee companies.
Manage actual and potential conflicts of interest related to engagement.

However, Blu Investment Management Ltd. does not have an engagement policy for the following clear and reasoned explanation:

Our investment strategy is primarily focused on Exchange Traded Funds (ETFs) and Undertakings for Collective Investment in Transferable Securities (UCITS) hedge funds. The fundamental structure of these investment vehicles means that:

Indirect Ownership in ETFs: When you invest in an ETF, you are purchasing shares of the ETF itself, not directly the underlying securities (like individual company shares) that the ETF holds. It is the ETF provider that legally owns the underlying shares and therefore possesses the associated voting rights. While some large ETF providers are beginning to offer "pass-through voting" options, allowing their investors to influence proxy votes, this is not a universal standard, and as an investor in the ETF, we typically do not directly exercise voting rights over the individual companies held within the ETF's portfolio. Our engagement is therefore with the ETF provider, not the underlying companies.
Nature of UCITS Hedge Funds: UCITS hedge funds, by their nature, are collective investment schemes designed to offer diversified exposure. While they may invest in various asset classes, including equities, the specific units or shares we hold in these UCITS funds do not typically confer direct voting rights on the underlying securities held within the fund's portfolio. The management company of the UCITS fund is responsible for exercising any voting rights associated with its underlying holdings, in line with its own investment objectives and policies. As an investor in the UCITS fund, our relationship is with the fund and its manager, not the companies whose securities the fund holds.

Furthermore, as stated on our UK Stewardship Code website page, we only ever hold very small positions in single stock equities. Consequently, the amount of voting and other shareholder rights we could exercise in such limited direct holdings would be negligible and not impactful enough to warrant a comprehensive engagement policy as described by SRD II.

Given this investment approach, where our holdings predominantly do not grant us direct voting rights or the ability to engage directly with the management of underlying investee companies, developing an engagement policy as outlined by SRD II would not be applicable or practical for our firm. Our focus is on the selection and monitoring of the ETFs and UCITS hedge funds themselves, rather than direct engagement with the companies they hold.