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DMFCO

PRI reporting framework 2020

You are in Strategy and Governance » Investment policy

Investment policy

SG 01. RI policy and coverage

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

01.3. Indicate if the investment policy covers any of the following

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

DMFCO offers institutional investors the opportunity to invest in Dutch residential mortgages. The investment strategy is developed to provide a yield over the relevant Euro swap curve that sufficiently compensates the risk of the underlying mortgages, the illiquidy of investments and the fund costs.

DMFCO adresses the following ESG considerations:

Environmental -   DMFCO takes the environmental impact of mortgages into account. DMFCO enables and actively promotes mortgage financing of energy-reducing measures (“EBM”) and thereby contributes to reduced energy use of households in the Netherlands.

Social - DMFCO operates in line with Dutch mortgage origination regulations and its duty of care to prevent overcrediting. DMFCO offers transparant, and socially responsible mortgages with fair conditions, also to socially disadvantaged consumers such as low income families.

Governance - The fund's governance is set up to specifically meet the requirements of Dutch pension funds. In doing so, it offers a high degree of say in its investment approach, such as the composition of its portfolios. Moreover, the investments of the fund meet the ESG exclusion criteria.

DMFCO provides investors with a monthly ESG report on the social and environmental impact of the portfolio.

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

Environmental

DMFCO actively promotes mortgage financing of energy saving measures, and thereby contributes to lowering the energy use of households in the Netherlands. DMFOC follows the NHG regulation for financing energy saving measures.

DMFCO is transparent about the impact of the mortgage portfolio on the environment in the Netherlands. DMFCO produces a monthly ESG report which includes indicators for environmental impact of the portfolio of each investor, that are based on the relevant recognised market practices. The ESG report has been developed in cooperation with Sustainalytics to ensure it is in line with Green Bond standards. The ESG report includes data on the energy labels and the CO2 footprint of the properties financed by the mortgage portfolio and can be used for carbon accounting of each investor’s mortgage portfolio.

DMFCO has developed a climate stress analysis tool in line with DNB climate scenarios. The climate stress analysis tool developed by DMFCO’s Portfolio Management team calculates the expected loss in case of flooding for each individual investor portfolio.

Society

The underwriting criteria of MUNT mortgages reflect the duty of care by DMFCO towards consumers and are aimed to prevent excessive lending. DMFCO accepts the prevailing Dutch market standards, stimulates responsible investing and acts as a modern and prudent mortgage lender.

DMFCO offers fair mortgage products and rates, thereby contributing to meeting the basic need of ‘living’. For instance, the automatic rate reduction that MUNT introduced in the market when a loan enters a new LtV category, has almost become common market practice in The Netherlands. In the special servicing process, DMFCO strives to help borrowers to stay in their house and only if all other measures fail, the property will be sold. When selling a property, the interests of borrowers are considered by minimising the total resulting loss. This usually coincides with the interests of investors.

DMFCO has developed a social reporting indicator in cooperation with Sustainalytics which shows the social impact of the DMFCO mortgage portfolio by quantifying the proportion of mortgage lending to low income households. Investors receive a monthly overview of which part of the portfolio qualifies as "Social", according to the recognised standards of Social Bonds. This data is also included in the monthly ESG report to investors.

Governance

DMFCO was established in accordance with the wishes of its investors. DMFCO is aware of the interests of the investor and strives to provide the investor with effective governance and influence, while simultaneously taking full responsibility for its entrusted tasks.

DMFCO is particularly aware of the role in society that is fulfilled by the financial sector and also by its mortgage originator MUNT Hypotheken. A balanced consideration of the interests of investors and consumers is applied in establishing DMFCO’s mortgage products and rates. DMFCO uses modern standardised employment conditions without individual variable remuneration (bonuses) and strives for intrinsic motivation of its employees.

01.6. Additional information [Optional].

          
        

SG 01 CC. Climate risk (Private)


SG 02. Publicly available RI policy or guidance documents

 

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

02.3. Additional information [Optional].


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

DMFCO recognizes the potential conflicts of interest in managing the fund and in originating mortgages. DMFCO aims to prevent opposing interests of any of its stakeholders by maintaining an ongoing awareness of their interests. DMFCO has specific policies and procedures in place to prevent conflicts of interest such as a code of conduct for its employees, a fair and transparent remuneration policy, a transparent mortgage investment process, and a governance structure that is specifically set up to provide sufficient influence to all fund investors. DMFCO annually reviews the continuing adequacy of its policies and procedures to prevent conlicts of interest. 

03.3. Additional information. [Optional]


SG 04. Identifying incidents occurring within portfolios (Private)


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