Around 30 jobs could be created by M&G Investments’ pre-emptive Brexit move announced earlier this week.
The London-based firm said it would not move staff from London and that about 30 jobs would be created in the Grand Duchy by the firm’s decision to transfer four UK-domiciled open-ended investment funds to Luxembourg, where they would become Sicav structures.
M&G’s move is a “precautionary move” ahead of the UK leaving the EU and the company also said that its “working assumption” was that funds domiciled in continental Europe will be able to continue, post-Brexit, to delegate the portfolio management to personnel in the UK.
However, the UK government’s expressed preference for a so-called hard Brexit – that would put the UK outside of the EU’s single market for financial services – has put at risk the ability of financial firms to delegate management work to the UK post-Brexit.
Last week Michel Barnier, the European Commission’s chief negotiator on Brexit, said that if the UK left the single market it was unlikely that financial services would be included in any future trade deal between the UK and the EU.
The four funds have a combined market value of £9.3 billion (€10.5 billion) and are distributed exclusively to customers outside the UK.
The four funds are: the M&G European Inflation Linked Corporate Bond Fund, the M&G Dynamic Allocation Fund, the M&G Income Allocation Fund and the M&G Prudent Allocation Fund.
Their assets will be merging into the new M&G (Lux) European Inflation-Linked Corporate Bond Fund, the M&G (Lux) Dynamic Allocation Fund, the M&G (Lux) Income Allocation Fund and the M&G (Lux) Conservative Allocation Fund respectively.
Three of the four new funds will launch on January 16, while the M&G (Lux) European Inflation-Linked Corporate Bond Fund will launch once the merger is completed.
The transfer of assets is subject to approval from fund shareholders who were yesterday sent formal notification of the proposals.
If shareholders agree, full mergers of the four funds are expected to take place in March.
The four new Luxembourg funds will follow identical strategies to the current UK-domiciled funds and will be run by the same fund managers in London, under the EU’s delegation rules.
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