Advisory business
Towers Watson Investment Services, Inc. / 5
In order to seek to achieve its investment objective,
each Sub-Fund generally invests in a range of underlying
portfolio funds and/or managed accounts or trades
directly pursuant to a delegation of investment authority
from TWIS to one or more investment managers.
Towers Watson Investment Management
Limited (“TWIM”), an affiliate of TWIS, serves
as a sub-advisor to certain Sub-Funds of the
Group Trust. TWIM advises TWIS with respect to
certain of its responsibilities with respect to the
Sub-Funds, including the hiring and termination
of investment managers.
TWIS provides consulting services to clients in the area
of developing medium-term and long-term investment
strategies for funds by broad classes of investment.
TWIS does not provide advice with respect to the
selection of individual securities except under certain
circumstances such as for bank and insurance company
pooled funds, mutual funds, exchange-traded funds,
collective investment trusts (CIT), derivatives,
annuity products, alternative investment funds —
including WTW affiliate-managed funds — or U.S.
government or AAA-rated sovereign negotiable debt
obligations. We typically develop such strategies with
the assistance of a computer model projecting future
obligations and probabilistic outcomes of alternative
investment strategies.
TWIS assists clients in the selection of investment
managers for their portfolios by providing quantitative and
statistical evaluations of their performances and providing
qualitative advice as to the managers whose approach
and style might be compatible with the client’s investment
objectives. In determining investment strategies for
allocations and other matters, clients may impose
restrictions on securities and types of securities.
Clients may engage TWIS for additional related services,
such as insurance contract analysis and research-related
projects relating to asset studies. As our clients have
unique investment goals that reflect their individual
situation, our service agreements with our clients are
customized to meet their needs.
We do not participate in wrap fee programs.
We manage approximately $42.2 billion on
a discretionary basis and $21.1 billion on a
non-discretionary basis, in each case as of
December 31, 2022.
WTW believes that sustainable investment is central
to successful long-term investment outcomes for our
clients. Therefore, WTW considers the financial impact
of environmental, social, and governance (“ESG”)
factors across its investment process. In formulating its
investment advice, WTW seeks to analyze and understand
the ESG factors in order to properly assess the risk and
return of the investment under consideration.
In analyzing the risk/reward profile of an investment,
WTW evaluates the impact of ESG risks and, as with any
other risks, seeks to ensure that the expected return for
every investment is commensurate with those risks.
The relevance of ESG factors will vary by asset class,
sector, and strategy, and the use of ESG factors will
depend in part on any regulatory, operational, or account
considerations. Further, WTW’s use of ESG factors might
differ from how others use such factors. WTW generally
prefers engagement over exclusion within WTW-affiliate
managed funds but acknowledges that an exclusionary
approach may be necessary when engagement is
unlikely to be effective or where certain business
practices are incompatible with sustainable investment.
Therefore, certain exclusion criteria is applied across asset
classes. Additional information regarding ESG and related
exclusions is available within the offering documents.
TWIS sponsors the Manager Ideas
Exchange
Conference ("MiX Conference"). The MiX
Conference provides engagement and
networking opportunities between asset
managers and TWIS. This event is attended by
investment management firms and investment
service providers.
We rely on investment research generated by the
Investment Manager Research Team (“Research Team”).
The Research Team is dedicated to researching and
evaluating non-affiliated investment managers worldwide
and consists of investment professionals from TWIS and
its global investment advisory affiliates. Our Research
Team monitors and rates non-affiliated investment
managers’ strategies. Certain of the investment managers
the Research Team reviews may participate in the MiX
Conference. Participation in the MiX Conference is not
and may not be considered in the manager evaluation
and selection process. See also Item 5 – Fees and
Compensation for information related to compensation
TWIS receives in relation to the MiX Conference.
6 / Towers Watson Investment Services, Inc.
In the case of the Group Trust, the Group Trust and its
Sub-Funds are responsible for their own organizational,
administrative, operating and investment expenses, as
outlined in the offering documents. The Group Trust
reserves the right to charge investors an Anti-Dilution Levy
which is further described in the offering documents of
the Group Trust.
TWIS does not accept compensation from third
parties for the sale of securities or other products.
However, a limited number of TWIS employees act as
registered representatives of an unaffiliated broker-dealer.
These employees do not receive compensation from the
third-party broker-dealer in connection with the sale of
pooled investment vehicles managed by TWIS
or its affiliates.
TWIS does not require clients to purchase
investment products that TWIS recommends
through any specific brokers or agents.
TWIS does not charge commissions or markups.
As discussed in Item 4, TWIS sponsors the MiX Conference
which certain investment managers and/or service
providers may attend for a fee. There are also outside
sponsorship opportunities available. TWIS receives
all revenue from this conference. The receipt of any
compensation is not tied to the sale of any WTW services
or WTW Funds.
All fees and compensation are negotiated in advance of
any work done and are established in a written contract
between TWIS and our client. We do not deduct fees
from assets. TWIS will bill for services in accordance
with the terms and conditions that are agreed upon with
our client. TWIS does not earn a management fee for
services provided to the Group Trust, but TWIS does earn
a management fee in connection with the investment
management agreement signed by each investor in the
Group Trust.
With the exception of DIS, fees are generally on a
fixed-fee retainer basis with monthly or quarterly billing.
For DIS, TWIS typically enters into an agreement with
compensation that is asset-based and expressed in basis
points. TWIS does not have a standard fee schedule as
fees are negotiable to reflect the level and the nature of
the responsibilities that TWIS assumes upon agreement
with the client, and they may be based on the size
and complexity of the portfolio and reflect the level of
services provided.
Clients may pay in advance, as determined by
prior agreement. If work terminates during a
calendar billing cycle, then TWIS will promptly
refund any unearned prepayments.
Our fees do not include custodian fees, brokerage
commissions, legal fees, auditor fees, transaction costs,
trustee fees or mutual fund expenses. Our clients will incur
these fees, costs or expenses through the investments
they make, including investments within the Group Trust
and its Sub-Funds. Our brokerage practices are discussed
in Item 12.