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Rivals to follow Columbia Threadneedle's Brexit lead

Rivals to follow Columbia Threadneedle's Brexit lead

The decision of Columbia Threadneedle to move its European clients into Sicav versions of its funds domiciled in Luxembourg as a result of the UK's looming exit from the EU is likely to be followed by others, according to Adrian Lowcock, investment director at Architas.

Mr Lowcock said Columbia Threadneedle's decision "is a pragmatic decision from the business. It ensures a continuity of service for their clients which is ultimately their priority.

"Whilst the timing might be early that is perhaps a sign of the uncertainty and lack of clarity of the Brexit process. Investors don't necessarily need to wait for a resolution so will move or not invest further, which begins to impact on a business so it has to also act."

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Philip Milton, who runs Philip Milton & Co in Devon, said such movement from investment houses is "inevitable" as a result of Brexit.

But he said recent data showed there hasn't been an exodus of high earning professionals from London.

Massimo Greco, head of EMEA funds at JP Morgan Asset Management, said: "EU investors represent an insignificant percentage of orders in our UK Oeic fund range.

"We have been operating a management company in Luxembourg for 30 years which serves clients in the EU, and other jurisdictions, with our extensive Sicav fund range."

As FTAdviser previously reported, the UK government's secretary of state for exiting the EU, David Davis, has refused to guarantee the status of the financial services sector as part of any new arrangement with the EU.

Clients of 20 Columbia Threadneedle funds, including the £4.4bn UK Equity Income fund, which is run by Richard Colwell, will be switched into the offshore versions of the same funds.

All clients are being switched to funds managed by precisely the same fund manager as previously, and will pursue the same investment strategy.

The relevant regulators in the UK and Europe have been informed of Columbia Threadneedle's intention to move.

Michelle Scrimgeour, chief executive for Europe, Middle East and Africa at Columbia Threadneedle, said: "Our priority is to provide certainty and continuity for our clients.

"By facilitating the transfer of European customers to our existing Luxembourg range we will ensure they can continue to access our best investment strategies in a Ucits-compliant fund, regardless of the final agreement between the UK and the EU. For EU investors, the transfers will remove uncertainty regarding the future status of their investment in their home country.”

The funds will be switched between May and September, with investors receiving further information prior to any switch being made.

In total, the funds being managed equate to £6.2bn in assets.