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Liz Nolan, State Street

Cross-border strategies gaining traction in light of Brexit, says State Street


More than half (54 per cent) of asset managers are reshaping their distribution strategy and expect to increase their staffing levels in new locations in response to Brexit within the next five years, according to a new survey by State Street.

The State Street 2018 Fund Strategy Survey, which surveyed 250 asset managers globally, analysed how they are developing cross-border strategies, including the factors influencing their choice of fund vehicle, passport and domicile location.
 
“Asset managers must stay nimble to thrive in this new market environment,” says Liz Nolan (pictured), State Street’s chief executive officer for EMEA. “The impact of Brexit is complex, particularly given the uncertainty surrounding negotiations. Our findings highlight how asset managers are proactively tackling the challenges it presents, and safeguarding their ability to support clients, remain competitive and access markets in a post-Brexit world.”
 
As Brexit negotiations persist, almost half (46 per cent) of respondents believe there will be an increased fragmentation of fund regulations in Europe over the next five years. This result no doubt reflects concerns about post-Brexit divergence between European and UK approaches to capital markets and investment regulation – a concern that is backed by the growth in managers planning to use the UK as a domicile in the future; with more than half (51 per cent) planning to target the UK as a future domicile of choice for product distribution – a nine-per cent increase from today.
 
“Despite the ongoing geopolitical dynamics, the data shows managers realise that, whatever barriers to trade and international cooperation may grow out of these dynamics, maintaining access to global markets and investors around the world remains essential to their business models, as well as to the institutions and individuals who rely on them for their savings and investments,” says David Suetens, head of State Street in Luxembourg.
 
“What is key for asset managers is the need for a partner that offers stability in uncertain times, as well as innovative solutions to navigate challenges,” says Akbar Sheriff, head of State Street Global Services in the UK. “With Brexit firmly on the horizon, this is more evident than ever, with 64 per cent of asset managers having an appetite to launch cross-border products in the next five years; ensuring they retain the ability to offer products to their client base. In particular, we have seen an increasing number of EU27 and internationally based asset manager clients making enquiries about UK fund launches, and we are supporting them accordingly with their planning and due diligence.”

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