The majority of asset managers are taking a 'wait and see' approach before finalising their post-Brexit plans, although they acknowledge they may face requirements to bolster their presence in mainland Europe in the future.
Following the UK's decision to leave the EU in last week's referendum, Columbia Threadneedle said it has begun applying for regulatory permission to expand its asset management presence in Luxembourg, with plans to replicate UK-based OEICs on its SICAV platform and have some fund managers based there, following the EU referendum result last week.
The group has joined M&G Investments in making plans to build up its operations within the European Union, as asset managers fear the detrimental effect Brexit will have on their distribution capabilities across the continent.
Columbia Threadneedle said it understands that under current EU rules any asset manager that wants to distribute in the EU will need to have fund managers based there, but added the vast majority of its managers can expect to remain where they are currently located. There are no plans to move its head office from London.
Meanwhile, M&G said it had begun building a funds business in Dublin over fears the UK's decision to leave the EU last week will make its London base less attractive.
According to the Financial Times, the asset management arm of insurer Prudential said it had begun setting up a new range of funds in Ireland to sell to European investors.
The firm reportedly said while staff would be added or relocated to manage the Dublin business, it would not move existing operations out of the UK, instead replicating funds.
Future plans
However, other UK-based asset managers contacted by Professional Adviser's sister title Investment Week say they have no plans in place at this stage to bolster their European presence.
Some larger groups already have a number of European offices and an extensive offshore range, while smaller groups say there is still uncertainty around what requirements will be in a post-Brexit world - especially as Article 50 of the Lisbon Treaty has not yet been triggered.
Hermes chief executive officer Saker Nusseibeh said: "Currently we are still members of the EU and subject to the same regulation as always; there is no indication that that is not a workable situation for now in the short term.
"We are a firm with fully registered funds in both Dublin and Luxembourg already so we do not need to change anything. Europe is our main market from both a funds and sales perspective and we are looking into the situation that if, as a fund group, we will need presence in Europe. However, much like everything else with this situation, it is very unclear currently as we do not know what will be agreed as part of the Brexit deal.
"Should the rules change, and we are required to have a presence in mainland Europe, then we would look to do that and open an office in the location which is best suited to our clients and is most competitive for us as a fund group as well. We believe this would be a fairly easy step for us to do.
"From my understanding of the situation so far, from press reports etc, some of the groups looking to expand their operations in Luxembourg already have offices in Europe but are moving first and getting permission early to increase capacity so they have options if they have to move their fund services there, should the need arise once a deal has been agreed."
Regulatory implications
A spokesperson for First State Investments said: "Now that Britain has voted to leave the EU, we believe it will take a considerable period of time to establish the legal and regulatory implications for UK and European fund structures, particularly as they relate to UCITS.
"We believe there are a number of structural options and we are committed to finding the best possible solution for all our UK and European investors as well as minimising disruption as much as possible.
"We will be working closely with the industry and regulators throughout this process. First State Investments have both a UK-domiciled UCITS fund range and an Irish-domiciled UCITS fund range."
A spokesperson for Henderson Global Investors said: "We have an OEIC range in the UK and a separate SICAV range domiciled in Luxembourg, so we are already operationally configured to sell in Europe.
"There may be a requirement to increase resourcing in Luxembourg, but that would be relatively modest. We already have offices in Europe, including Luxembourg. Our headquarters will remain in the UK.
"There is no need for a knee-jerk reaction. It would be at least a two-year process and there would be a lot for us to know and understand in that time."
Dublin interest
Stuart Alexander, chief executive at Gemini Investment Management, said he has already seen a significant increase in requests from USA and Asia-based asset managers for its Dublin based Fund Hosting Platform.
"We saw an uptick in requests for information earlier in the year but since the beginning of June it has gone crazy with almost daily emails and calls from far and wide.
"Since Friday we have also seen a couple of managers say they want to re-create their UK domiciled funds in an offshore domicile as well as a few US managers say there is little point entering the UK funds marketplace if they want to target the broader UCITS marketplace.
"The question over domicile and the need for greater and broader distribution capability is not going away and Brexit has just accelerated it."
Dan Mannix, CEO at RWC, said the group launched its funds under a Luxembourg SICAV to ensure they complied with UCITS regulations ten years ago.
He added: "Around 95% of our industry has made a massive commitment by domiciling funds in Luxembourg and Dublin. People are getting excited about passporting, and there maybe some changes to come, but 95% of the industry have already commited."
