British money managers may set up a number of new funds in the Grand Duchy in the wake of Brexit, an investment research firm has forecast.
Dublin and London are also likely to benefit from growth as asset managers move to maintain market access to both the EU and UK, according to a report issued this week by Thomson Reuters Lipper.
“After the ‘Brexit’ vote and its possible implications for fund distribution in Europe, we are expecting the number of products to rise over the course of the next two years,” wrote the firm’s Detlef Glow and Christoph Karg. “Investment managers based in the United Kingdom will ensure their access to the continental European market with the launch of products that are domiciled in the EU, while EU-based asset managers may start to launch funds that are domiciled in the U.K.”
“The first scenario is expected to lead to an even higher dominance of Luxembourg and Ireland as international fund hubs in Europe, while the latter may drive up the number of products domiciled in the U.K.,” the report stated.
At the same, Lipper expects several current funds to close under “increasing pressure on profitability”. In addition, many asset managers will merge existing funds (or “further clean up their product ranges”) in light of “increasing costs from the permanently increasing regulatory demands”.
1 in 4 European funds based in Grand Duchy
The paper said that across Europe 463 new funds were launched during the second quarter of the year, while 689 were closed or merged.
As of 30 June, “Luxembourg continued to dominate the fund market in Europe, hosting 9,109 funds” out of “31,815 mutual funds registered for sale in Europe”. France, home to 4,452 funds, was the second largest domicile.