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Rathbones joins Brexodus with Luxembourg fund launch

Rathbones joins Brexodus with Luxembourg fund launch

Rathbones is to register Luxembourg fund structures for a series of its top-selling investment strategies to ensure that it is still able to service European clients once the UK leaves the European Union.

The company has since 2016 marketed its strategies into the continent via a Luxembourg feeder fund, with primary strategies registered in London.   

‘However, Rathbones expects that after 29 March the current Ucits status of the master-feeder arrangement will end, thus ending the ability to market the funds in the EU,’ it said in a statement.

The business said it would cover any associated legal, transactional or administrative costs.

Chief executive of Rathbones Unit Trust Management Mike Webb (pictured) said: ‘With continued uncertainty surrounding the UK’s post-Brexit relationship with the EU, Rathbones has taken all reasonable steps to ensure that its Luxembourg-domiciled fund range remains distributable in the EU.'

The company did not immediately disclose how much client money would be affected by the change.

The company’s £1.2 billion Ethical Bond fund runs approximately £43 million in its euro share class, although euro denomination may not be an exact guide to where the cash originated.

A series of fund majors have been forced to seek direct authorisation within the EU for funds historically sold into the continent from London, with both Dublin and Luxembourg winning custody business.

Hermes last month became the latest fund major to join the Brexodus, launching an Irish subsidiary, hiring Carol Mahon from Fidelity International as local boss. Aoifinn Devitt, formerly chief investment officer at Chicago's police pension fund, will serve as head of investment at the new company.

M&G Investments is believed to have shifted £34.2 billion of non-sterling share classes from Britain to Luxembourg, while Legal & General Investment Management has launched a Dublin entity to transfer its European client funds into.

Columbia Threadneedle also said it plans to shift as much as €7 billion (£6.14 billion) managed for EU clients out of its UK Oiec range to its Luxembourg Sicavs.

Away from the billions of pounds in client money already heading out the door, fund firms are also eyeing up the possibility of sending more staff to places like Dublin and Luxembourg, with the latter in particular emphasising the need for companies to strengthen the level of supervision.

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