Up to 40% of Northern Trust’s institutional clients have asked the firm to segregate its UK assets from their European portfolios to protect them from Brexit-related risks.
Northern Trust Asset Management’s chief executive for Europe and Asia Wayne Bowers said that clients, particularly sovereign wealth funds and sophisticated non-European clients, were making the request in order to be more “tactical”.
“Instead of having their European equity and fixed income exposure to include the UK, they are saying can you please ring-fence UK exposure,” he said.
“They want it segregated recognising they may want to take an extra asset allocation position but they want to be able to do that without impacting their broader European exposure.”
Bowers added that clients had asked for similar ring-fencing during the global financial crisis, when bank stocks were separated from other assets.
He also said he expected things would be “tough” for the UK economy and sterling for the next few years because of the “opportunity cost” of Brexit, as the government focuses on cutting ties with the EU rather than on the economy.
Last week the Chicago-based $1 trillion (€860 billion) asset manager announced it had chosen Luxembourg rather than Dublin as its post-Brexit EU hub.
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