M&G to launch Luxembourg-based Sicav amid Brexit fears

Added 10th October 2016

M&G Investments has announced plans to launch Luxembourg-domiciled Sicavs in response to predictions that Britain is likely to experience a ‘hard Brexit’ when it leaves the European Union in 2019.

M&G to launch Luxembourg-based Sicav amid Brexit fears

The £255bn ($279bn, €249bn) UK-based asset manager said it is awaiting permission from the local regulator to offer two sub-funds for retail investors outside the UK.

Under the current system, financial services firms headquartered in EU member states have the automatic right to sell services across the 28-nation bloc with low costs and a single set of rules known as ‘passporting’.

Last week, British prime minister Theresa May effectively ruled out continued membership of the single market, sending the pound plummeting down to a 31-year low against the dollar.

Grant Speirs, M&G’s group finance director, described the new funds as a “prudent move” amid fears Brexit may create distribution problems for UK-based funds abroad if passporting is abandoned.

“A Luxembourg retail Sicav platform will enable us to offer fund strategies to European retail investors if the UK loses financial services passporting rights in several years’ time as a result of its exit from the EU,” he said in a statement.

If approved by the CSSF (Commission de Surveillance du Secteur Financier), M&G hopes to offer the funds - which instead of replicating existing funds will be based on new investment strategies - by the end of the year.

M&G added it will continue to offer Ucits funds domiciled in the UK and Ireland, as well as in Luxembourg.

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