Information on the Financial Services provided in Switzerland by HBM Partners AG

(Art. 8 and 9 FINSA1 and Art. 6 to 15 FINSO2)

Information about the Financial Service Provider (FINSA 8/1/a+b; FINSO 6)

1 FINSA: Swiss Federal Act on Financial Services of 15 June 2018, as amended 
2 FINSO: Ordinance on Financial Services of 6 November 2019, as amended 
3 FINIA: Swiss Federal Act on Financial Institutions of 15 June 2018, as amended

Possibility of initiating a mediation proceedings before a recognized Ombudsman’s Office

HBM provides financial services exclusively to institutional or professional clients and, in application of Art. 77 FINSA, is therefore in principle exempt from the obligation to affiliate with an Ombudsman’s office. Nonetheless, HBM has opted to affiliate with FINOS Finanzombudsstelle Schweiz.

Information on the Financial Services Offered (FINSA 8/2/a and FINSO 7)

Acquisition or Disposal of Financial Instruments for clients (FINSA 3/c/1) 

Nature, Features and Functionalities (FINSO 7/1/a) 

HBM distributes foreign collective investment schemes in Switzerland (“Funds”), for which HBM acts as sponsor (initiator) and for which it performs the investment management function itself. In addition, HBM distributes shares of HBM Healthcare Investment AG to qualified investors (“Shares”), which are listed on the Swiss Stock Exchange (the Funds and the Shares together mentioned as “Financial Instruments”.) 

HBM offers and/or distributes the following Financial Instruments: 

• Shares of HBM Healthcare Investment AG
• HBM Global Biotechnology Fund, Luxembourg
• HBM Global Healthcare Fund, Luxembourg
• HBM Panorama Healthcare Fund, Cayman
• HBM Cobra India, Cayman as well as the
• HBM China Healthcare Fund, Cayman. 
   

HBM Global Biotechnology Fund and the HBM Global Healthcare Fund HBM are open-ended investment funds with multiple compartments governed by Luxembourg law, established in accordance with the provision of Part I of the 2010 Law (“UCITS”). HBM has appointed FundPartner Solutions (Suisse) SA, which forms a part of the Pictet Group, as representative and Banque Pictet & Cie SA as paying agent for the UCITS. 

The Cayman-based HBM Panorama Healthcare Fund, HBM Cobra India and HBM China Healthcare Fund (“Cayman Funds”) have appointed First Independent Fund Services Ltd. as representative and NPB New Private Bank Ltd. as the paying agent for the Cayman Funds.

Insofar as offers are made to certain end clients that are specifically directed towards the acquisition or sale of shares of the Financial Instruments, this activity qualifies as a financial service within the meaning of FINSA 3/c/1. However, the investment decision remains with the client in this case, and no investment advice in the narrower sense is provided.

Clients’ Fundamental Rights and Obligations (FINSO 7/1/b)

The essential obligation of the client is to transfer the subscribed or committed investment amount after subscription of one of the Financial Instruments or after receipt of capital call. The client is also obliged to read the legal documents of the Financial Instruments, in particular the Fund prospectuses, before making an investment decision. These documents are available from HBM or the representative upon request. 

As with all types of financial services, clients, including professional clients and to some extent institutional clients, have broad rights to be informed, to be rendered account and to be handed over certain documents. 

For further details, in particular on the rights and obligations of clients and the risks associated with the Financial Instruments themselves (product side), reference is made to the legal documents of the respective Financial Instrument.

Management of financial instruments (FINSA 3/c/3) / Management of collective assets or collective investment schemes (FINIA 24/1/a) 

Nature, Features and Functionalities (FINSO 7/1/a) 

The UCITS have appointed FundPartner Solutions (Europe) S.A. – Part of Pictet Group, as the management company (“Management Company”). In this capacity, the Management Company acts as asset manager, administrator, corporate and domiciliary agent, paying agent and registrar and transfer agent of the UCITS’ shares. Under the management company services agreement, the Management Company provides (i) investment management services; (ii) administrative agency, corporate and domiciliary agency, paying agent, registrar and transfer agency services and (iii) marketing and distribution services to the UCITS, subject to the overall supervision and control of the board of directors of the Management Company. 

The Management Company has entrusted the daily management of the UCITS to HBM. 

HBM acts as investment advisor to the HBM Cobra India Fund pursuant to an investment advisory agreement. The responsibilities of HBM includes, but are not limited to, providing advice, analysis of the selection of investments and preparing periodic reports. Furthermore, HBM acts as investment manager to the HBM Panorama Healthcare Fund as well as to the HBM China Healthcare Fund based on dedicated investment management agreements. 

Management Company Clients’ Fundamental Rights and Obligations (FINSO 7/1/b) 

According to FINIA 32ff, the Management Company and the UCITS are subject to the prudential supervision of the foreign supervisory authority responsible for it, the CSSF in Luxembourg, and has therefore, in application of FINSA 4/3/c in conjunction with FINSA 4/4, been qualified as an institutional client by HBM. According to FINSA 20/1, the supervisory provisions of FINSA, in particular the rules of conduct, are not applicable to transactions with institutional clients. The rights and obligations of the UCITS as clients are therefore largely contractual in nature and arise from the investment management agreement. 

General Risks Associated with Financial Instruments (FINSA 8/1/d; FINSO 7/3) 

HBM, when performing its distribution and offering activities, will not address the specific needs of each individual client to the extent it would if it were providing investment advisory services, but will focus primarily on the characteristics of the Financial Instruments it distributes. 

A typical feature of collective investment schemes is that they normally bundle multiple investments, which makes them sensitive to the behavior and risks associated with those investments. Typical risks include market risk, liquidity risk, issuer and counterparty risk, concentration risk, operational risk (IT risk; risk of human error), technical risk, external risk (war, terrorism, trade war, pandemics), the risk of having to make further payments (e.g., margin payments or claw backs), or a combination of several risk factors. 

A comprehensive disclosure of the main characteristics, functionalities and risks associated with each financial instrument distributed by HBM can be found in the legal documentation of the Financial Instruments, which is provided to each client as a basis for the client’s investment decision. 

If you have any doubts about specific characteristics, functionalities or risks of a particular financial instrument, please contact HBM directly at info@hbmpartners.com 

For further information on risks associated with Financial Instruments, in particular in connection with collective investment schemes, please refer to the Swiss Bankers Association’s brochure "Risks Involved in Trading Financial Instruments", which can be downloaded free of charge under www.swissbanking.ch 

Information on the Risks Associated with Financial Services (FINSA 8/2/a) 

Financial Service: Acquisition/Disposal of Financial Instruments for Clients 

In HBM’s view, the client essentially bears the following risks in connection with the use of services to acquire or dispose of Financial Instruments (formerly commonly referred to as distribution services): 

• Asset devaluation risk (Risk of loss): the risk that Financial Instruments acquired will lose value (or that financial instruments sold at the wrong time will gain value). This risk depends on the respective financial instrument and, if applicable, on the assets underlying this financial instrument. For the risks associated with financial instruments in general, see the section above. For risks specifically associated with financial instruments distributed by HBM, please refer to the legal documents.
• Information risk (client side): The risk that the investor does not have sufficient information to make an appropriate investment decision despite the legal documents provided by HBM, in particular the legal documents of the Financial Instruments. This may result from the nature of this service, which does not take into account the client’s overall portfolio, nor does it include a review of the client’s financial situation and investment objectives (no appropriateness test and no suitability test). There may also be an information deficit in the case of professional investors who have waived their right to information under FINSA 20/2 and institutional investors to whom the financial service provider’s information obligations do not apply at all (FINSA 20/1).
• Information risk (Financial Service Provider side): The risk arising from the fact that HBM focuses its distribution activities on the product side, i.e., on the Financial Instruments it distributes, rather than on the specific needs of its clients. In particular, HBM does not conduct an appropriateness or suitability test as it would have to do in the case it provided investment advisory services. As a result, the investment in the Financial Instruments may not be suitable for all clients.
• Monitoring risk: The risk that the client does not monitor his or her portfolio, or only monitors it inadequately, which may result in an unfavorable allocation within the client’s portfolio over time. The client should be aware that HBM does not have an overview of the client portfolio when providing its services and consequently cannot monitor it nor is it obliged to monitor it. 
   

Product risk: For the risks associated with the Financial Instruments, see the legal documents of the Financial Instruments distributed as well as the brochure “Risks Involved in Trading Financial Instruments” published by the Swiss Bankers Association. Professional and institutional investors may be offered or recommended to purchase financial instruments that offer less liquidity, less diversification and/or less transparency and, in general, less investor protection than financial instruments intended for retail clients. Also, financial instruments reserved for professional and institutional clients may be fully or partially exempt from regulatory requirements or may be entirely unregulated.

Information on Costs (FINSA 8/2/a; FINSO 8) 

Costs in connection with the offering or distribution of the financial instruments

HBM does not receive a separate distribution commission or other compensation for its services in connection with the offering and distribution of the Financial Instruments but is compensated as portfolio manager with a Management Fee or as the advisor with a Advisory Fee. These fees represent HBM’s sole compensation for all of its services to the Financial Instruments and to the client, and the client incurs no other costs on the part of HBM for these services.

Third-party costs may also be incurred, e.g., transaction commissions, brokerage fees, custody fees, etc., over which HBM has no influence. The distribution of the Financial Instruments by third parties may also incur additional costs over which HBM has no influence. 

Information on Business Affiliations with third parties (FINSA 8/2/b and FINSO 9)

Financial service providers must provide information on business affiliations with third parties (including companies of the group the financial service provider belongs to) in connection with the financial services offered, if these affiliations may lead to a conflict of interest in connection with the financial service.

HBM is a stock corporation under Swiss law. HBM Healthcare Investments AG, Zug, is a stock corporation listed on the Swiss Stock Exchange (“HBI”). There is some overlap in personnel between HBM and HBI, although it is contractually ensured that the employees concerned are independent of instructions. 

Theoretically, conflicts of interest may also arise in the allocation of investments in HBM’s different Financial Instruments. However, several internal measures are in place to prevent specific Financial Instruments being placed at a disadvantage as a result of such potential conflicts of interest and are outlined in more detail in manuals and discussed and documented in meetings. Regarding opportunities in public investments and their allocation to different public funds, potential conflicts of interests are generally reduced due to the strategy and size of investments. Interests are generally weighted carefully against each other and final decision on allocation will be in the best interest of investors at all times. 

Information on the Market Offer taken into account when selecting financial instruments (FINSA 8/2/c and FINSO 10) 

The collective investment schemes offered or distributed by HBM are exclusively collective investment schemes of the HBM Group of Companies. They are issued on behalf of HBM by third parties (fund management companies, management companies, AIFMs) and, as so-called “private label funds”, are managed and distributed exclusively by HBM. 

Third-party financial instruments are not offered, distributed or recommended. 

Information on Conflicts of Interest (FINSA 25 + 26; FINSO 26) 

HBM endeavors to avoid conflicts of interest in connection with its activities as a financial services provider or offeror/distributor of financial instruments. It has taken appropriate precautions to identify conflicts of interest and to take measures to avoid them. 

Conflicts of interest cannot always be completely ruled out in companies that provide financial services for their clients, in spite of having established an efficient conflicts of interest management. In accordance with legal requirements, we inform you below about the nature and sources of potential conflicts of interest and our precautions for dealing with them.

Nature and Source of possible Conflicts of Interest 

Conflicts of interest may arise between us as a financial services provider or offeror/distributor of financial instruments, our board of directors and senior management, our employees or other persons associated with us, and our clients, or between our clients themselves. See also the discussion of economic ties to third parties above. 

Conflicts of interest may arise, in particular:

• when offering or distributing financial instruments for our own or our group’s interest in selling a particular financial instrument;
• from any performance-related remuneration of employees and third-party distributors;
• from relationships between HBM and management companies or fund management companies or other issuers, collective investment schemes or other legal entities, e.g. in the case of cooperations and connections under company law or contractual relationships such as a credit relationship, or if employees or other persons associated with us are themselves involved in management companies or fund management companies or other issuers or in the financial instruments (under company law or economically) or invest in them or participate in the issue;
• through compensation received from third parties in connection with the provision of financial services (in particular brokerage fees, commissions, commissions, rebates or other pecuniary advantages);
• by compiling and disseminating information on financial instruments offered to clients for purchase;
• by obtaining information that is not publicly known;
• from personal relationships of our employees or management or persons associated with them; • from the economic interest of any affiliated companies, their directors and shareholders in the sale of a financial instrument. 
   

Arrangements for handling conflicts of interest

In order to prevent conflicts of interest in the provision of financial services from leading to the disadvantage of clients, HBM commits itself and its employees to maintaining high ethical standards. These include observing client interests at all times by acting diligently, honestly, lawfully and professionally. 

Specifically, HBM takes the following precautions: 

• Maintenance of organizational procedures to safeguard the client’s interests when offering or distributing financial instruments and when providing other services, if applicable (e.g., through internal directives and guidelines);
• Adherence to a remuneration policy in accordance with regulatory requirements that ensures that employees act in the best interests of clients. The remuneration policy ensures that, through compensation, sales targets or otherwise, employees are not incentivized to offer or sell a particular financial instrument to an investor, even though another financial instrument would obviously better meet the investor’s needs (however, HBM’s financial services do not consist of the sale of third-party products, nor does it provide investment advice. It is therefore not obliged to prepare client profiles or to document client needs);
• Prevention of improper influence;
• Regulations on the acceptance of compensation by third parties in connection with financial services, as well as disclosure of such compensation;
• Disclosure of conflicts of interest that cannot be avoided. These are disclosed to the clients concerned before a transaction is concluded to ensure that the client’s respective decision is always made on an informed basis;
• Employee training;
• Rules on handling confidential information and (potential) insider information. 
   

We will be happy to provide further details on potential conflicts of interest on request.