Rathbones scraps Sicav feeders as it preps for life post-Brexit

Changes affect sub-funds of David Coombs’ £920m multi-asset range

Rathbones has announced it will retool its Sicav range, which includes feeder funds into David Coombs’ £920m multi-asset range, to ensure European investors will not lose access to its funds post-Brexit.

In preparation for an uncertain post-Brexit regulatory environment the fund group said it would be scrapping Sicav sub-funds for Rathbone Ethical Bond, Rathbone Income and its trio of multi-asset strategies, replacing them with directly-invested funds that will be created in Luxembourg.

The current Luxembourg-domiciled feeder-funds, which were set up in 2016, invest into the UK domiciled master funds; however, Rathbones expects that after 29 March the current Ucits status of the master-feeder arrangement will end, meaning they will no longer be able to market this structure in the EU.

The underlying UK master funds have some £3.2bn in assets under management. The Rathbones Ethical Bond fund, managed by Bryn Jones and Noelle Cazalis, and Rathbone Income fund, run by Carl Stick and Alan Dobbie, are over £1bn each, while Coombs’ three multi-asset funds are just shy of that amount collectively.

FundSize
Rathbone Ethical Bond£1.23bn
Rathbone Multi-Asset Total Return£294.28m
Multi-Asset Strategic Growth£549.63m
Multi-Asset Enhanced Growth Portfolio£75.84m
Rathbone Income Fund£1.09bn
Source: Trustnet

Distribution disruption

Mike Webb (pictured) chief executive of Rathbone Unit Trust Management said the firm had done all it could do to make sure there is as little disruption as possible with the firm’s European distribution after the UK leaves the EU next month.

“With continued uncertainty surrounding the UK’s post-Brexit relationship with the EU, Rathbones has taken all reasonable steps to ensure that its Luxembourg-domiciled fund range remains distributable in the EU,” Webb said.

The new vehicles will follow the same investment strategy as the UK-domiciled funds, the firm said, and the move will allow existing investors in the Sicav to continue to maintain their investments.

After March 29, Rathbones’ UK domiciled unit trusts and Oeics will be known in the EU as “Non-EEA Alternative Investment funds” (AIFs).

Rathbones believes European investors who are invested in any of these funds should be able to continue to do so. However, converting the Luxembourg-domiciled sub-funds from feeder funds into directly-invested funds will allow investors to benefit from the same investment strategies and process, and with the same fund managers as before, within a Ucits framework.

The FTSE 250 investment manager has said it will bear all legal, administrative and transaction costs associated with the conversion.

Rathbones is the latest UK manager to unveil a Brexit contigency plan. Last year M&G and Columbia Threadneedle announced they would be transferring billions of pounds of European client money from Oeics into Sicav equivalents. Others like Legal & General Investment Management (LGIM), Polar Capital and, most recently, Hermes have confirmed new offices around Europe.

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