Impact of Brexit on Asset and Fund Managers


Following Brexit, asset and fund managers have started actively considering the effect that official exodus will have on their assets under management, the current financial services regulatory practices, the ease of conducting their business and marketing their products in the EU along with their access to expertise in financial service. Now the Brexit negotiations have entered its second year, the Asset Management industry in UK is preparing for a long-term uncertainty. Losing the access to the single European market and potential transformation of the delegation model has increases the anxiety among UK asset managers. Being the leading investment services firm, Sergo Capital have realized that the withdrawal of Britain presents a great possibility for competing European financial centres to fill the void created because of declining financial dominance of London.

Considering that Brexit is due within a year and there is no firm exit agreement in place, Sergo Capital has sensed the state of insecurity among the asset managers of UK. The loss of rights to manage funds domiciled in EU countries and access to the European single market is a big threat for the future of the standing of UK as the largest asset management centre in Europe. At present, the asset management industry of Britain has a worth of more than 9.1 trillion EUR with London operating as the hub of asset management in Europe, employing more than 38,000 professionals. According to Dan Waters, the managing director of ICI Global, the trade body for global fund managers, “the focus for the asset management industry is on making a smooth move to deliver services to clients no matter what happens”.

Approximately one-third of large investment firms with significant operation in the UK have outlined a plan to shift parts of their operations to Luxembourg or Dublin that are both fund management centres. Saker Nusseibeh, the CEO of Hermes Investment Management, partially bought by Federated Investors recently, are also planning to open a management company in Dublin. He said, “Of course, we are keenly observing the constantly changing political circumstances and we are always expecting transparency and security from the treasury, the regulators and other major organizations involved in Brexit”.

Moving operations to the EU remains to be the safest approach to assure access to the European single market and the third party management services in Luxembourg provide a great possibility for UK asset managers to access the EU.  

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