In Luxembourg, they talk about fund management firms “doing it the M&G way” – that is, arriving from the UK to create or expand operations ahead of Brexit. M&G Investments was among the first players to do this after the EU referendum. Similarly, Ireland has increased its funds population, partly thanks to Legal & General Investment Management and Hermes.
These firms did this because to distribute funds in the EU, managers from the UK must have a good degree of operational and regulatory ‘substance’ there.
To distribute funds into the UK, though, managers from the EU – as long as they have UK distribution rights already – need only apply for extended temporary permissions from the FCA. In a sense, the UK has made it easy to keep its business links with the EU asset management industry. For UK managers going into the EU, it is harder.
Does this new un-mutual funds arrangement reflect respectively the weak and strong bargaining powers of the current UK government and the EU? Possibly. Elsewhere in this issue, a leading Brexiteer says the UK government’s negotiators had showed “idiocy”.
Nick Fitzpatrick is group editor at Funds Europe
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