Fund activity is increasingly being driven offshore because of the UK's tax situation, resear...
Fund activity is increasingly being driven offshore because of the UK's tax situation, research from the Investment Management Association has revealed.
The annual Asset Management Survey found a number of senior figures in the investment industry, who were interviewed on their views of the market, felt the UK was losing out as a result of tax considerations. There was also criticism of the general attitude of the UK fiscal authorities in their approach to the industry.
The survey revealed that £650bn of retail assets were managed in the UK (representing 21% of the total assets) and that £230bn was domiciled abroad, of which £20bn is accounted for by sales back into the UK.
Assets managed in pooled vehicles are estimated to account for 45% of total assets under management in the UK, equating to £1.4 trillion. Of this, 39% is in pooled vehicles domiciled offshore. In terms of the number of firms domiciling funds overseas, 40 out of 55 respondents indicated they had some funds domiciled overseas.
The survey also highlighted the growing dominance of Luxembourg as a financial centre in comparison to Ireland or the UK. In 2003, there were 741 fund launches in Luxembourg, 189 in the UK and 152 in Ireland. However, in 2006, there were 1,400 fund launches in Luxembourg (an almost 50% increase), 202 in Ireland and 143 in the UK.
Interviewees generally agreed that clients internationally were not particularly concerned about where a fund is domiciled. Instead, clients were more concerned with the legal structure of the fund.
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