AGREEMENT made as of the 5th day of December, 2008, by and between Genworth Financial Wealth Management, Inc. a California corporation (the “Advisor”), and Diamond Hill Capital Management, Inc. (the “Sub-Advisor”).
AGREEMENT
made as of the 5th day
of December, 2008, by and between Genworth Financial Wealth Management,
Inc. a California corporation (the “Advisor”), and Diamond Hill Capital
Management, Inc. (the “Sub-Advisor”).
WHEREAS, the Advisor and the
Sub-Advisor are registered investment advisers under the Investment Advisers Act
of 1940, as amended (the “Advisers Act”), and engage in the business of
providing investment management services; and
WHEREAS, the Advisor has been
retained to act as investment adviser pursuant to an Investment Advisory
Agreement dated October 20, 2006 (the “Advisory Agreement”) with AssetMark Funds
(the “Trust”), a Delaware statutory trust registered with the U.S. Securities
and Exchange Commission (the “SEC”) as an open-end management investment company
under the Investment Company Act of 1940, as amended (the “1940 Act”), currently
consisting of several separate series of shares, each having its own investment
objectives and policies, and which is authorized to create additional series in
the future; and
WHEREAS, the Advisory
Agreement permits the Advisor, subject to the supervision and direction of the
Trust’s Board of Trustees, to delegate certain of its duties under the Advisory
Agreement to other investment advisers, subject to the requirements of the 1940
Act; and
WHEREAS, the Advisor desires
to retain the Sub-Advisor to assist the Advisor in the provision of a continuous
investment program for that portion of one or more of the Trust’s series’ (each
a “Fund”) assets which the Advisor will assign to the Sub-Advisor (the
“Sub-Advisor Assets”), and the Sub-Advisor is willing to render such services,
subject to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in
consideration of mutual covenants recited below, the parties agree and promise
as follows:
1
The
Sub-Advisor acknowledges that the Advisor is a wholly-owned subsidiary of
Genworth Financial, Inc., and the purchase, acquisition, or possession of
securities issued by Genworth and/or its affiliated entities (collectively
referred to as “Genworth Securities”) by the Fund is therefore prohibited under
the 1940 Act. Accordingly, the Sub-Advisor is directed and hereby
agrees to refrain from the purchase, acquisition, or possession of Genworth
Securities on behalf of the Fund.
The
Advisor agrees to provide the Sub-Advisor information concerning: (i) a Fund;
(ii) its assets available or to become available for investment; and (iii) the
conditions of a Fund’s or the Trust’s affairs as relevant to the
Sub-Advisor.
The
Advisor will provide the Sub-Advisor with reasonable (30 days) advance notice,
in writing, of: (i) any change in a Fund’s investment objectives, policies and
restrictions as stated in the Prospectus; (ii) any change to the Declaration of
Trust or By-Laws; and (iii) any material change in the Trust Compliance
Procedures; and the Sub-Advisor, in the performance of its duties and
obligations under this Agreement, shall manage the Sub-Advisor Assets
consistently with such changes, provided the Sub-Advisor has received such prior
notice of the effectiveness of such changes from the Trust or the
Advisor. In addition to such notice, the Advisor shall provide to the
Sub-Advisor a copy of a modified Prospectus and copies of the revised Trust
Compliance Procedures, as applicable, reflecting such changes. The
Sub-Advisor hereby agrees to provide to the Advisor in a timely manner, in
writing, such information relating to the Sub-Advisor and its relationship to,
and actions for, a Fund as may be required to be contained in the Prospectus or
in the Trust’s registration statement on Form N-1A, or otherwise as reasonably
requested by the Advisor.
2
In order
to assist the Trust and the Trust’s Chief Compliance Officer (the “Trust CCO”)
to satisfy the requirements contained in Rule 38a-1 under the 1940 Act, the
Sub-Advisor shall provide to the Trust CCO: (i) direct access to the
Sub-Advisor’s chief compliance officer (the “Sub-Advisor CCO”), as reasonably
requested by the Trust CCO; (ii) a completed quarterly informational
questionnaire regarding the Sub-Advisor’s compliance program and participation
in a quarterly telephone call with the Trust CCO to discuss the responses on the
questionnaire; (iii) quarterly reports confirming that the Sub-Advisor has
complied with the Trust Compliance Procedures in managing the Sub-Advisor
Assets; and (iv) quarterly certifications indicating whether there were Material
Compliance Matters (as that term is defined by Rule 38a-1(e)(2)) that arose
under the Trust Compliance Procedures that related to the Sub-Advisor’s
management of the Sub-Advisor Assets.
3
In
evaluating the best overall terms available, and in selecting the broker or
dealer to execute a particular transaction, the Sub-Advisor may also consider
the brokerage and research services (as those terms are defined in Section 28(e)
of the Securities Exchange Act of 1934, as amended (the “1934 Act”)) provided to
a Fund and/or other accounts over which the Sub-Advisor may exercise investment
discretion. The Sub-Advisor is authorized to pay to a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for any of the Funds that is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if, but only if, the Sub-Advisor determines in good faith that
such commission was reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer, viewed in terms of that
particular transaction or in terms of the overall responsibilities of the
Sub-Advisor to a Fund. Such authorization is subject to termination
at any time by the Advisor or by the Board of Trustees of the Trust for any
reason.
Under no
circumstances will the Sub-Advisor compensate a broker or dealer for any
promotion or sale of Fund shares, or the promotion of the Genworth Financial
Wealth Management investment platform, by directing to the broker or dealer: (i)
portfolio securities transactions on behalf of the Fund; or (ii) any
remuneration, including but not limited to any commission, xxxx-up, xxxx-down,
or other fee (or portion thereof) received or to be received from such portfolio
transactions effected through any other broker (including a government
securities broker) or dealer (including a municipal securities dealer or a
government securities dealer).
The
Sub-Advisor may only direct the Fund’s portfolio securities transactions to a
broker or dealer that promotes or sells Fund shares as permitted by the
provisions of the 1940 Act (and the rules thereunder) and the policies and
procedures adopted the Trust, as amended from time to time. The
Advisor will provide the Sub-Advisor with a copy of such policies and procedures
and any amendments thereto.
4
The
Sub-Advisor, when selecting brokers and dealers to effect the Fund’s portfolio
securities transactions, shall not take into account the brokers’ and dealers’
promotion or sale of shares of the Fund or any other registered investment
company, or the promotion of the Genworth Financial Wealth Management investment
platform. In addition, the Sub-Advisor shall not enter into any
agreement (whether oral or written) or other understanding under which the
Sub-Advisor directs, or is expected to direct, the Fund’s portfolio securities
transactions, or any remuneration, including but not limited to any commission,
xxxx-up, xxxx-down, or other fee (or portion thereof) received or to be received
from such portfolio transactions effected through any other broker
(including a government securities broker) or dealer (including a municipal
securities dealer or a government securities dealer); and, to a
broker (including a government securities broker) or dealer (including a
municipal securities dealer or a government securities dealer) in consideration
for the promotion or sale of shares of the Fund or any other registered
investment company.
In
addition, the Sub-Advisor is authorized to allocate purchase and sale orders for
portfolio securities to brokers or dealers that are affiliated with the Advisor,
the Sub-Advisor, the Trust’s principal underwriter, or other sub-advisors (if
applicable) if the Sub-Advisor believes that the quality of the transaction and
the commission are comparable to what they would be with other qualified firms
and provided that the transactions are consistent with the Trust’s Rule 17e-1
and/or Rule 10f-3 procedures (as applicable). The Advisor will
identify all brokers and dealers affiliated with the Trust, the Advisor, the
Trust’s principal underwriter (and the other Sub-Advisors of the Fund, to the
extent such information is necessary for the Sub-Advisor to comply with
applicable federal securities laws, other than those whose sole business is the
distribution of mutual fund shares, who effect securities transactions for
customers. The Advisor shall promptly furnish a written notice to the
Sub-Advisor if the information so provided is no longer accurate.
In
connection with its management of the Sub-Advisor Assets and consistent with its
fiduciary obligation to the Trust and other clients, the Sub-Advisor, to the
extent permitted by applicable laws and regulations, may, but shall be under no
obligation to, aggregate the securities or futures contracts to be sold or
purchased in order to obtain the most favorable price or lower brokerage
commissions and efficient execution. In such event, allocation of the
securities or futures contracts so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Sub-Advisor in the manner the
Sub-Advisor considers to be, over time, the most equitable and consistent with
its fiduciary obligations to the Sub-Advisor Assets and to such other
clients.
The
Sub-Advisor acknowledges that the Advisor and the Trust may rely on Rule 17a-7,
Rule 17a-10, Rule 10f-3, Rule 12d3-1 and Rule 17e-1 under the 1940 Act, and the
Sub-Advisor hereby agrees that it shall not consult with any other sub-advisor
to the Trust with respect to transactions in securities for the Sub-Advisor
Assets or any other transactions of Trust assets.
5
The
Sub-Advisor is authorized to engage in transactions in which the Sub-Advisor, or
an affiliate of the Sub-Advisor, acts as a broker for both the Fund and for
another party on the other side of the transaction (“agency cross
transactions”). The Sub-Advisor shall effect any such agency cross
transactions in compliance with Rule 206(3)-2 under the Advisers Act and any
other applicable provisions of the federal securities laws and shall provide the
Advisor with periodic reports describing such agency cross
transactions. By execution of this Agreement, the Advisor authorizes
the Sub-Advisor or its affiliates to engage in agency cross transactions, as
described above. The Advisor may revoke its consent at any time by
written notice to the Sub-Advisor.
The
Sub-Advisor hereby represents that it has implemented policies and procedures
that will prevent the disclosure by it, its employees or its agents of the
Trust’s portfolio holdings to any person or entity other than the Advisor, the
Trust’s custodian the Trust’s fund accountant, the Trust’s administrator, or
other persons expressly designated by the Advisor.
6
The
Sub-Advisor also will provide such information or perform such additional acts
as are customarily performed by a Sub-Advisor and may be required for a Fund or
the Advisor to comply with their respective obligations under applicable federal
securities laws, including, without limitation, the 1940 Act, the Advisers Act,
the 1934 Act, the Securities Act of 1933, as amended (the “1933 Act”) and any
rule or regulation thereunder.
7
The
Sub-Advisor agrees to reduce the investment management fee for the Sub-Advisor
Assets should the Sub-Advisor offer a lower fee to a similarly situated
client. Factors the Sub-Advisor shall consider include the following:
client type, asset amount, number of products, and level of service
required. The Sub-Advisor shall provide the Advisor with prior notice
should the fee be reduced in accordance with this section.
If this
Agreement is terminated prior to the end of any calendar month, the fee shall be
prorated for the portion of any month in which this Agreement is in effect
according to the proportion which the number of calendar days, during which this
Agreement is in effect, bears to the number of calendar days in the month, and
shall be payable within ten (10) days after the date of
termination.
(a) The
Sub-Advisor is registered as an investment adviser under the Advisers
Act;
(b) The
Sub-Advisor is a limited liability company duly organized and validly existing
under the laws of the State of Delaware, with the power to own and possess its
assets and carry on its business as it is now being conducted;
(c) The
execution, delivery and performance by the Sub-Advisor of this Agreement are
within the Sub-Advisor’s powers and have been duly authorized by all necessary
action on the part of its Board of Directors and no action by or in respect of,
or filing with, any governmental body, agency or official is required on the
part of the Sub-Advisor for the execution, delivery and performance by the
Sub-Advisor of this Agreement, and the execution, delivery and performance by
the Sub-Advisor of this Agreement do not contravene or constitute a default
under: (i) any provision of applicable law, rule or regulation; (ii) the
Sub-Advisor’s governing instruments; or (iii) any agreement, judgment,
injunction, order, decree or other instrument binding upon the Sub-Advisor;
and
8
(d) The
Form ADV of the Sub-Advisor previously provided to the Advisor is a true and
complete copy of the form as currently filed with the SEC and the information
contained therein is accurate and complete in all material respects and does not
omit to state any material fact necessary in order to make the statements made,
in light of the circumstances under which they are made, not
misleading. The Sub-Advisor will promptly provide the Advisor and the
Trust with a complete copy of all subsequent amendments to its Form
ADV.
(a) The
Advisor is registered as an investment adviser under the Advisers
Act;
(b) The
Advisor is a corporation duly organized and validly existing under the laws of
the State of California with the power to own and possess its assets and carry
on its business as it is now being conducted;
(c) The
execution, delivery and performance by the Advisor of this Agreement are within
the Advisor’s powers and have been duly authorized by all necessary action on
the part of its Board of Directors, and no action by or in respect of, or filing
with, any governmental body, agency or official is required on the part of the
Advisor for the execution, delivery and performance by the Advisor of this
Agreement, and the execution, delivery and performance by the Advisor of this
Agreement do not contravene or constitute a default under: (i) any provision of
applicable law, rule or regulation; (ii) the Advisor’s governing instruments; or
(iii) any agreement, judgment, injunction, order, decree or other instrument
binding upon the Advisor;
(d) The
Advisor acknowledges that it received a copy of the Sub-Advisor’s Form ADV prior
to the execution of this Agreement;
(e) The
Advisor and the Trust have duly entered into the Advisory Agreement pursuant to
which the Trust authorized the Advisor to enter into this
Agreement.
9
Notwithstanding
any other provision in this Agreement, the Sub-Advisor will indemnify the
Advisor, the Trust and each Fund, and their respective affiliates and
controlling persons for any liability and expenses, including reasonable
attorneys’ fees, to which they may be subjected as a result of their reliance
upon and use of the historical performance calculations provided by the
Sub-Advisor concerning the Sub-Advisor’s composite account data or historical
performance information on similarly managed investment companies or accounts,
except that the Advisor, the Trust and each Fund and their respective affiliates
and controlling persons shall not be indemnified for a loss or expense resulting
from their negligence or willful misconduct in using such numbers, or for their
failure to conduct reasonable due diligence with respect to such
information.
The
Advisor shall indemnify the Sub-Advisor, its affiliates and its controlling
persons (the “Advisor Indemnified Persons”), for any liability and expenses,
including reasonable attorneys’ fees, howsoever arising from, or in connection
with, the Advisor’s breach of this Agreement, or its representations and
warranties herein, or as a result of the Advisor’s willful misfeasance, bad
faith, negligence, reckless disregard of its duties hereunder, or violation of
applicable law; provided, however, that the Advisor Indemnified Persons shall
not be indemnified for any liability or expenses which may be sustained as a
result of the Sub-Advisor’s willful misfeasance, bad faith, negligence, or
reckless disregard of its duties hereunder.
10
This
Agreement shall not be assigned and shall terminate automatically in the event
of its assignment, except as provided otherwise by any rule, exemptive order
issued by the SEC, or No-Action Letter provided or pursuant to the 1940 Act, or
upon the termination of the Advisory Agreement. In the event that
there is a proposed change in control of the Sub-Advisor that would act to
terminate this Agreement, if a vote of shareholders to approve continuation of
this Agreement is at that time deemed by counsel to the Trust to be required by
the 1940 Act or any rule or regulation thereunder, the Sub-Advisor agrees to
assume all reasonable costs associated with soliciting shareholders of the
appropriate Fund(s) of the Trust, to approve continuation of this
Agreement. Such expenses include the costs of preparation and mailing
of a proxy statement, and of soliciting proxies.
This
Agreement shall extend to and bind the heirs, executors, administrators and
successors of the parties hereto.
11
(a)
|
If
to the Advisor:
Genworth
Financial Wealth Management, Inc.
0000
Xxxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxxxxx
Xxxx, XX 00000-0000
Attn: Xxxxxx X.
Xxxxxx
|
(b)
|
If
to the Sub-Advisor:
Diamond
Hill Capital Management, Inc.
000
Xxxx X. XxXxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx,
XX 00000
Attn: Xxxx
X. Xxxxx
|
17. Governing Law. This Agreement shall be
governed by the internal laws of the State of Delaware, without regard to
conflict of law principles; provided, however that nothing herein shall be
construed as being inconsistent with the 1940 Act. Where the effect
of a requirement of the 1940 Act reflected in any provision of this Agreement is
altered by a rule, regulation or order of the SEC, whether of special or general
application, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
12
ADVISOR
GENWORTH
FINANCIAL WEALTH
MANAGEMENT,
INC.
By:__________________________________
Name:
Xxxxxx X. Xxxxxx
Title:
Senior Vice President and Chief
Operations
Officer
SUB-ADVISOR
DIAMOND
HILL CAPITAL MANAGEMENT,
INC.
By:__________________________________
Name:
Xxxxx X. Xxxxx
Title:
Chief Financial Officer
13
EXHIBIT
A
SUBADVISORY
AGREEMENT
BETWEEN GENWORTH FINANCIAL WEALTH
MANAGEMENT, INC.
AND
DIAMOND
HILL CAPITAL MANAGEMENT, INC.
Effective
December 5, 2008
AssetMark Large Cap Value
Fund
FEE
SCHEDULE
ASSETS
|
COMPENSATION |
First $ 50
million
|
0.425%
|
Next $ 50
million
|
0.400%
|
Over $100
million
|
0.350%
|