SUB-ADVISORY AGREEMENT
TOUCHSTONE SMALL CAP VALUE FUND
TOUCHSTONE FUNDS GROUP TRUST
This SUB-ADVISORY AGREEMENT is made as of July 1, 2016, by and
between TOUCHSTONE ADVISORS, INC., an Ohio corporation (the
"Advisor"), and LMCG INVESTMENTS, LLC, a Delaware limited
liability company (the "Sub-Advisor").
WHEREAS, the Advisor is an investment advisor registered under
the Investment Advisers Act of 1940, as amended, and has been
retained by Touchstone Funds Group Trust (the "Trust"), a
Delaware business trust organized pursuant to an Agreement and
Declaration of Trust dated October 25, 1993 (as amended) and
registered as an open-end diversified management investment
company under the Investment Company Act of 1940 (the "1940
Act"), to provide investment advisory services with respect to
certain assets of the Touchstone Small Cap Value Fund (the
"Fund"); and
WHEREAS, the Sub-Advisor also is an investment advisor
registered under the Investment Advisers Act of 1940, as
amended; and
WHEREAS, the Advisor desires to retain the Sub-Advisor to
furnish it with portfolio management services in connection with
the Advisor's investment advisory activities on behalf of the
Fund, and the Sub-Advisor is willing to furnish such services to
the Advisor and the Fund;
NOW THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is agreed as follows:
1.Employment of the Sub-Advisor. In accordance with and subject
to the Investment Advisory Agreement between the Trust and the
Advisor, attached hereto as Exhibit A (the "Advisory
Agreement"), the Advisor hereby appoints the Sub-Advisor to
manage the investment and reinvestment of that portion of the
assets of the Fund allocated to it by the Advisor (the "Fund
Assets"), in conformity with the Fund's currently effective
prospectus and Statement of Additional Information and subject
to the control and direction of the Advisor and the Trust's
Board of Trustees, for the period and on the terms hereinafter
set forth. The Sub-Advisor hereby accepts such employment and
agrees during such period to render the services and to perform
the duties called for by this Agreement for the compensation
herein provided. The Sub-Advisor shall at all times maintain
its registration as an investment advisor under the Investment
Advisers Act of 1940 (the "Advisers Act") and shall otherwise
comply in all material respects with all applicable laws and
regulations, both state and federal. The Sub-Advisor shall for
all purposes herein be deemed an independent contractor and
shall, except as expressly provided or authorized (whether
herein or otherwise), have no authority to act for or represent
the Trust in any way or otherwise be deemed an agent of the
Trust or the Fund.
2.Duties of the Sub-Advisor. The Sub-Advisor will provide the
following services and undertake the following duties:
a.The Sub-Advisor will manage the investment and reinvestment of
the Fund Assets, subject to and in accordance with the
investment objectives, policies and restrictions of the
Fund and in conformity with the Fund's currently effective
prospectus and Statement of Additional Information and any
directions which the Advisor or the Trust's Board of
Trustees may give from time to time with respect to the
Fund. In furtherance of the foregoing, the Sub-Advisor
will make all determinations with respect to the investment
of the Fund Assets and the purchase and sale of portfolio
securities and shall take such steps as may be necessary or
advisable to implement the same. The Sub-Advisor also will
determine the manner in which voting rights, rights to
consent to corporate action and any other rights pertaining
to the portfolio securities will be exercised. The Sub-
Adviser shall not be responsible for initiating any legal
action or taking any action on behalf of the Fund with
respect to any legal proceedings, including class actions
or bankruptcies, related to securities or other investments
held in the account(s), or the issuers thereof; provided,
however, that upon receipt by the Sub-Advisor of legal
notices or related materials for the Fund involving
securities purchased by the Sub-Advisor for the Fund, the
Sub-Advisor shall promptly transmit such legal notices or
related materials to the Fund's current sub-administrator,
or as otherwise directed by Advisor. Subject to the
foregoing, the Advisor hereby expressly retains the right
and obligation to take such legal action relating to the
securities held in the Fund. The Sub-Advisor will render
regular reports to the Trust's Board of Trustees and to the
Advisor (or such other advisor or advisors as the Advisor
shall engage to assist it in the evaluation of the
performance and activities of the Sub-Advisor). Such
reports shall be made in such form and manner and with
respect to such matters regarding the Fund and the Sub-
Advisor as the Trust or the Advisor shall from time to time
request; provided, however, that in the absence of
extraordinary circumstances, the individual primarily
responsible for management of Fund Assets for the Sub-
Advisor will not be required to attend in person more than
one meeting per year with the trustees of the Trust.
b.The Sub-Advisor shall immediately notify the Advisor if the
Sub-Advisor reasonably believes that the value of any
security held by the Fund may not reflect fair value. The
Sub-Advisor agrees to provide any pricing information of
which the Sub-Advisor is aware to the Advisor and/or any
Fund pricing agent to assist in the determination of the
fair value of any Fund holdings for which market quotations
are not readily available or as otherwise required in
accordance with the 1940 Act or the Fund's valuation
procedures for the purpose of calculating the Fund's net
asset value in accordance with procedures and methods
established by the Board.
c.Regulatory Compliance.
(i)The Sub-Advisor agrees to comply with the requirements of the
1940 Act, the Advisers Act, the 1933 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act"), the
Commodity Exchange Act and the respective rules and
regulations thereunder, as applicable, as well as with all
other applicable federal and state laws, rules, regulations
and case law that relate to the services and relationships
described hereunder and to the conduct of its business as a
registered investment adviser. In selecting the Fund's
portfolio securities and performing the Sub-Adviser's
obligations hereunder, the Sub-Advisor shall cause the Fund
to comply with the diversification and source of income
requirements of Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"), for qualification as a
regulated investment company. The Sub-Advisor shall
maintain compliance procedures that it reasonably believes
are adequate to ensure the compliance with the foregoing.
No supervisory activity undertaken by the Advisor shall
limit the Sub-Advisor's full responsibility for any of the
foregoing.
(ii)The Sub-Advisor has adopted a written code of ethics that it
reasonably believes complies with the requirements of Rule
17j-1 under the 1940 Act, which it will provide to the
Advisor and the Fund. The Sub-Advisor shall ensure that
its Access Persons (as defined in the Sub-Advisor's Code of
Ethics) comply in all material respects with the Sub-
Advisor's Code of Ethics, as in effect from time to time.
Upon request, the Sub-Advisor shall provide the Fund with
(i) a copy of the Sub-Advisor's current Code of Ethics, as
in effect from time to time, and (ii) a certification that
it has adopted procedures reasonably necessary to prevent
Access Persons from engaging in any conduct prohibited by
the Sub-Advisor's Code of Ethics. No less frequently than
annually, the Sub-Advisor shall furnish a written report,
which complies with the requirements of Rule 17j-1,
concerning the Sub-Advisor's Code of Ethics to the Fund and
the Advisor. The Sub-Advisor shall respond to requests for
information from the Advisor as to violations of the Code
by Access Persons and the sanctions imposed by the Sub-
Advisor. The Sub-Advisor shall immediately notify the
Advisor of any material violation of the Code, whether or
not such violation relates to a security held by any Fund.
(iii)The Sub-Advisor shall notify the Trust's Chief Compliance
Officer and Advisor immediately upon detection of (i) any
material failure to manage any Fund in accordance with its
investment objectives and policies or any applicable law;
or (ii) any material breach of any Fund or Adviser policy,
guideline or procedure that the Advisor has provided to the
Sub-Advisor in writing. In addition, the Sub-Advisor shall
provide a quarterly report regarding each Fund's compliance
with its investment objectives and policies and applicable
law, including, but not limited to the 1940 Act, the Code,
and the Fund's and the Advisor's policies, guidelines or
procedures as applicable to the Sub-Advisor's obligations
under this Agreement. The Sub-Advisor acknowledges and
agrees that the Advisor may, in its discretion, provide
such quarterly compliance certifications to the Board. The
Sub-Advisor agrees to correct any such failure promptly and
to take any action that the Board and/or the Advisor may
reasonably request in connection with any such breach. The
Sub-Advisor shall also provide the officers of the Trust
with supporting certifications in connection with such
certifications of Fund financial statements and disclosure
controls pursuant to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. The Sub-
Advisor will promptly notify the Trust in the event (i) the
Sub-Advisor is served or otherwise receives notice of any
action, suit, proceeding, inquiry or investigation, at law
or in equity, before or by any court, public board, or
body, involving the affairs of the Trust (excluding class
action suits in which a Fund is a member of the plaintiff
class by reason of the Fund's ownership of shares in the
defendant) or the compliance by the Sub-Advisor with the
federal or state securities laws or (ii) the controlling
stockholder of the Sub-Advisor changes or an actual change
in control resulting in an "assignment" (as defined in the
1940 Act) has occurred or is otherwise proposed to occur.
(iv)The Sub-Advisor shall maintain separate books and detailed
records of all matters pertaining to the Fund's assets
advised by the Sub-Advisor required by Rule 31a-1 under the
1940 Act (other than those records being maintained by the
Advisor, custodian or transfer agent appointed by the Fund)
relating to its responsibilities provided hereunder with
respect to the Fund, and shall preserve such records for
the periods and in a manner prescribed therefore by Rule
31a-2 under the 1940 Act (the "Fund Books and Records" ).
The Fund Books and Records shall be available to the
Advisor and the Board at any time upon request shall be
delivered to the Trust upon the termination of this
Agreement and shall be available for telecopying without
delay during any day the Fund is open for business.
d.The Sub-Advisor shall provide support to the Advisor with
respect to the marketing of the Fund, including but not
limited to: (i) permission to use the Sub-Advisor's name
as provided in Section 5, (ii) permission to use the past
performance and investment history of the Sub-Advisor with
respect to a composite of other funds managed by the Sub-
Advisor that are comparable, in investment objective and
composition, to the Fund, (iii) access to the individual(s)
responsible for day-to-day management of the Fund for
marketing conferences, teleconferences and other activities
involving the promotion of the Fund, subject to the
reasonable request of the Advisor, (iv) permission to use
biographical and historical data of the Sub-Advisor and
individual manager(s), and (v) permission to use the names
of those clients pre-approved by the Sub-Advisor to which
the Sub-Advisor provides investment management services,
subject to receipt of the consent of such clients to the
use of their names.
e.The Sub-Advisor will, in the name of the Fund, place orders
for the execution of all portfolio transactions in
accordance with the policies with respect thereto set forth
in the Trust's registration statements under the 1940 Act
and the Securities Act of 1933, as such registration
statements may be in effect from time to time. When
placing orders with brokers and dealers, the Sub-Advisor's
primary objective shall be to obtain the most favorable
price and execution available for the Fund, and in placing
such orders the Sub-Advisor may consider a number of
factors, including, without limitation, the overall direct
net economic result to the Fund (including commissions,
which may not be the lowest available but ordinarily should
not be higher than the generally prevailing competitive
range), the financial strength and stability of the broker,
the efficiency with which the transaction will be effected,
the ability to effect the transaction at all where a large
block is involved and the availability of the broker or
dealer to stand ready to execute possibly difficult
transactions in the future. Consistent with the Conduct
Rules of the Financial Industry Regulatory Authority
(FINRA), and subject to seeking most favorable price and
execution and compliance with Rule 12b-1(h) under the 1940
Act, the Sub-Advisor may select brokers and dealers to
execute portfolio transactions of the Fund that promote or
sell shares of the Fund. The Sub-Advisor is specifically
authorized, to the extent authorized by law (including,
without limitation, Section 28(e) of the 1934 Act, to pay
a broker or dealer who provides research services to the
Sub-Advisor an amount of commission for effecting a
portfolio transaction in excess of the amount of commission
another broker or dealer would have charged for effecting
such transaction, in recognition of such additional
research services rendered by the broker or dealer, but
only if the Sub-Advisor determines in good faith that the
excess commission is reasonable in relation to the value of
the brokerage and research services provided by such broker
or dealer viewed in terms of the particular transaction or
the Sub-Advisor's overall responsibilities with respect to
discretionary accounts that it manages, and that the Fund
derives or will derive a reasonable benefit from such
research services. The Sub-Advisor will present a written
report to the Board of Trustees of the Trust, at least
quarterly, indicating total brokerage expenses, actual or
imputed, as well as the services obtained in consideration
for such expenses, broken down by broker-dealer and
containing such information as the Board of Trustees
reasonably shall request.
f.The Sub-Adviser shall maintain errors and omissions insurance
coverage in an appropriate amount and shall provide prior
written notice to the Trust (i) of any material changes in
its insurance policies or insurance coverage; or (ii) if
any material claims will be made on its insurance policies.
Furthermore, the Sub-Advisor shall, upon reasonable
request, provide the Trust with any information it may
reasonably require concerning the amount of or scope of
such insurance.
▇.▇▇ the event of any reorganization or other change in the Sub-
Advisor, its investment principals, supervisors or members
of its investment (or comparable) committee, the Sub-
Advisor shall give the Advisor and the Trust's Board of
Trustees written notice of such reorganization or change
within a reasonable time (but not later than 30 days) after
such reorganization or change.
h.The Sub-Advisor will bear its expenses of providing services
to the Fund pursuant to this Agreement except such expenses
as are expressly undertaken by the Advisor or the Trust.
3.Compensation of the Sub-Advisor.
▇.▇▇ compensation for the services to be rendered and duties
undertaken hereunder by the Sub-Advisor, the Advisor will
pay to the Sub-Advisor a monthly fee equal on an annual
basis to XXX% of the average daily net assets of the Fund,
without regard to any total expense limitation of the Trust
or the Advisor. Such fee shall be computed and accrued
daily. If the Sub-Advisor serves in such capacity for less
than the whole of any period specified in this Section 3a,
the compensation to the Sub-Advisor shall be prorated. For
purposes of calculating the Sub-Advisor's fee, the daily
value of the Fund Assets shall be computed by the same
method as the Trust uses to compute the net asset value of
the Fund for purposes of purchases and redemptions of
shares thereof.
b.The Sub-Advisor reserves the right to waive all or a part of
its fees hereunder.
4.Activities of the Sub-Advisor. The Sub-Advisor will report to
the Board of Trustees of the Trust (at regular quarterly
meetings and at such other times as such Board of Trustees
reasonably shall request, subject to the limitation on personal
attendance at such meetings set forth in Section 2a) (i) the
financial condition and prospects of the Sub-Advisor, (ii) the
nature and amount of transactions affecting the Fund that
involve the Sub-Advisor and affiliates of the Sub-Advisor, (iii)
information regarding any potential conflicts of interest
arising by reason of its continuing provision of advisory
services to the Fund and to its other accounts, and (iv) such
other information as the Board of Trustees shall reasonably
request regarding the Fund, the Fund's performance, the services
provided by the Sub-Advisor and affiliates of the Sub-Advisor to
the Fund as compared to its other accounts and the plans of, and
the capability of, the Sub-Advisor with respect to providing
future services to the Fund and its other accounts. The Sub-
Advisor agrees to submit to the Trust a statement defining its
policies with respect to the allocation of business among the
Fund and its other clients.
The Sub-Advisor has supplied to the Advisor and the Trust copies
of its Form ADV with all exhibits and attachments thereto
(including the Sub-Advisor's statement of financial condition)
and will hereafter supply to the Advisor, promptly upon the
preparation thereof, copies of all amendments or restatements of
such document.
5.Use of Names. Neither the Advisor nor the Trust shall use the
name of the Sub-Advisor in any prospectus, sales literature or
other material relating to the Advisor or the Trust in any
manner not approved in advance by the Sub-Advisor; provided,
however, that the Sub-Advisor will approve all uses of its name
which merely refer in accurate terms to its appointment
hereunder or which are required by the SEC or a state securities
commission; and provided further, that in no event shall such
approval be unreasonably withheld. The Sub-Advisor shall not
use the name of the Advisor or the Trust in any material
relating to the Sub-Advisor in any manner not approved in
advance by the Advisor or the Trust, as the case may be;
provided, however, that the Advisor and the Trust shall each
approve all uses of their respective names which merely refer in
accurate terms to the appointment of the Sub-Advisor hereunder
or which are required by the SEC or a state securities
commission; and, provided further, that in no event shall such
approval be unreasonably withheld.
6.Liability of the Sub-Advisor. The Sub-Advisor shall indemnify
and hold harmless the Trust and all affiliated persons thereof
(within the meaning of Section 2(a)(3) of the ▇▇▇▇ ▇▇▇) and all
controlling persons (as described in Section 15 of the 1933 Act)
(collectively, the "Sub-Advisor Indemnitees") against any and
all losses, claims, damages, liabilities or litigation
(including reasonable legal and other expenses) by reason of or
arising out of: (a) the Sub-Advisor being in material violation
of any applicable federal or state law, rule or regulation or
any investment policy or restriction set forth in the Fund's
prospectus and Statement of Additional Information or any
written direction or instruction provided in writing by the
Board, or (b) the Sub-Advisor's willful misfeasance, bad faith
or gross negligence generally in the performance of its duties
hereunder or its reckless disregard of its obligations and
duties under this Agreement. As used in the foregoing clauses
(a) and (b), the term "Sub-Advisor" shall include the Sub-
Advisor and/or any of its affiliates and the directors, officers
and employees of the Sub-Advisor and/or any of its affiliates.
7.Limitation of Trust's Liability. The Sub-Advisor acknowledges
that it has received notice of and accepts the limitations upon
the Trust's liability set forth in its Declaration of Trust.
The Sub-Advisor agrees that (i) the Trust's obligations to the
Sub-Advisor under this Agreement (or indirectly under the
Advisory Agreement) shall be limited in any event to the Fund
Assets and (ii) the Sub-Advisor shall not seek satisfaction of
any such obligation from the holders of shares of the Fund,
other than the Advisor, nor from any Trustee, officer, employee
or agent of the Trust.
8.Force Majeure. The Sub-Advisor shall not be liable for delays
or errors occurring by reason of circumstances beyond its
control, including but not limited to acts of civil or military
authority, national emergencies, work stoppages, fire, flood,
catastrophe, acts of God, insurrection, war, riot, or failure of
communication or power supply. In the event of equipment
breakdowns beyond its control, the Sub-Advisor shall take all
reasonable steps to minimize service interruptions but shall
have no liability with respect thereto.
9.Renewal, Termination and Amendment.
a.This Agreement shall continue in effect, unless sooner
terminated as hereinafter provided, until July 1, 2018; and
it shall continue thereafter provided that such continuance
is specifically approved by the parties and, in addition,
at least annually by (i) the vote of the holders of a
majority of the outstanding voting securities (as herein
defined) of the Fund or by vote of a majority of the
Trust's Board of Trustees and (ii) by the vote of a
majority of the Trustees who are not parties to this
Agreement or interested persons of either the Advisor or
the Sub-Advisor, cast in person at a meeting called for the
purpose of voting on such approval.
b.This Agreement may be terminated at any time, without payment
of any penalty, (i) by the Advisor upon not more than sixty
(60) days' nor less than thirty (30) days' written notice
delivered or mailed by registered mail, postage prepaid, to
the Sub-Advisor; (ii) by the Sub-Advisor upon not less than
sixty (60) days' written notice delivered or mailed by
registered mail, postage prepaid, to the Advisor; or (iii)
by the Trust upon either (y) the majority vote of its Board
or (z) the affirmative vote of a majority of the
outstanding voting securities of the Fund. This Agreement
shall terminate automatically in the event of its
assignment.
c.This Agreement may be amended at any time by the parties
hereto, subject to approval by the Trust's Board of
Trustees and, if required by applicable SEC rules and
regulations, a vote of the majority of the outstanding
voting securities of the Fund affected by such change.
d.The terms "assignment," "interested persons" and "majority of
the outstanding voting securities" shall have the meaning
set forth for such terms in the 1940 Act.
10.Severability. If any provision of this Agreement shall
become or shall be found to be invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
11.Notice. Any notices under this Agreement shall be in writing
addressed and delivered personally (or by telecopy) or mailed
postage-paid, to the other party at such address as such other
party may designate in accordance with this paragraph for the
receipt of such notice. Until further notice to the other
party, it is agreed that the address of the Trust and that of
the Advisor for this purpose shall be ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and that the address of the Sub-Advisor
shall be ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
12.Miscellaneous. Each party agrees to perform such
further actions and execute such further documents as are
necessary to effectuate the purposes hereof. This Agreement
shall be construed and enforced in accordance with and governed
by the laws of the State of Ohio and the Sub-Advisor consents to
the jurisdiction of courts, both state or federal, in Ohio, with
respect to any dispute under this Agreement.. The captions in
this Agreement are included for convenience only and in no way
define or delimit any of the provisions hereof or otherwise
affect their construction or effect. This Agreement may be
executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
THE REMAINDER OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered in their names and on
their behalf by the undersigned, thereunto duly authorized, all
as of the day and year first above written.
TOUCHSTONE ADVISORS, INC.
BY:
BY:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇/s/▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
PresidentName: ▇▇▇ ▇▇▇▇▇▇
Title: VP
LMCG INVESTMENTS, LLC
Attest:
BY:/s/▇▇▇▇▇▇▇ ▇▇▇▇ /s/▇▇▇▇▇▇ ▇. Tower III
▇▇▇▇▇▇▇ ▇▇▇▇
Chief Executive OfficerName: ▇▇▇▇▇▇ ▇. Tower III
Title: CCO/COO
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1-PH/2656036.2