Brexit: Your questions answered

6 min read 24 Oct 20

Summary: We want to answer some of your most frequently asked questions about Brexit.

While the UK and the EU have now reached a deal, our Brexit preparations were robust and we don’t anticipate any change in our plans. We will continue to monitor any  political and regulatory developments and update this website accordingly.

For more information, please get in touch with your regular contact at M&G or find the best way to reach us on the Contact us section of this website.

1. How have you been preparing for Brexit?

Following the EU referendum in 2016, M&G acted to minimise disruption to our clients, protect their interests and provide certainty and clarity where we could, regardless of the outcome of the Brexit negotiations.

We have built a new international hub in Luxembourg: a fully licensed and operational business distributing traditional and alternative funds and servicing our investors in Europe, Asia and America. 

We completed the migration of assets for most non-UK investors from our UK OEIC range to our Luxembourg SICAV funds in March 2019. Since then, EU and international investors in our funds have been serviced through our Luxembourg hub, while UK investors continue to be serviced in London.

Our Alternative Investment Funds (AIFs) were already largely domiciled in either Luxembourg or Ireland. The operation of these will now managed by our Luxembourg hub.

2. Will you be able to continue to manage funds distributed in the EU from the UK from January 2021?

In short, yes.

For EU and other international investors in SICAV mutual funds and AIFs, the UK Financial Conduct Authority, the European Securities and Markets Authority and the National Competent Authorities (NCAs) have confirmed that the Memorandums of Understanding enabling continued delegation of portfolio management activities will be valid from 1 January 2021.

For our existing EU clients who have appointed M&G Investments Management Limited (MAGIM) to manage their segregated or advisory mandates, we are putting in place a number of arrangements to ensure that we can continue to provide these services. This includes expanding the regulatory permissions of our EU-based entities, as well as the passporting of those permissions to the relevant EU-jurisdictions.

3. Will EU investors be able to remain invested in UK funds after Brexit?

It is unlikely that UK-domiciled funds will retain their ‘Undertakings for Collective Investment in Transferable Securities’ (UCITS) status once the UK leaves the EU on 31 December 2020. This, along with the fact that with the UK exiting the EU the funds will no longer be domiciled or registered in the EU, could have implications for EU investors, including tax consequences.

We are in the process of contacting clients domiciled outside the UK who remain invested in the M&G Global Themes Fund and other smaller OEICs to explain their options.

We are also aware of the news regarding some UK banks taking the decision to close UK bank accounts for customers living in certain EEA locations. If you are an EEA-domiciled client investing in one of our OEIC funds through a UK bank account and we haven’t contacted you yet, we will be doing so shortly. In the meantime, please get in touch with your bank to understand your options.

Please reach out to your distributor or regular contact at M&G if you want to further discuss these at any time.

4. Do I need to do anything?

If you are domiciled outside the UK and invested in one or more of our SICAVs, or if you are a UK-domiciled client investing in one of our OEICs, you don´t need to take any action.

The vast majority of our clients domiciled outside the UK are invested in our Luxembourg-domiciled SICAVs.

We are in the process of contacting clients domiciled outside the UK who remain invested in the M&G Global Themes Fund and other smaller OEICs to explain their options.

We are also aware of the news regarding some UK banks taking the decision to close UK bank accounts for customers living in certain EEA locations. If you are an EEA-domiciled client investing in one of our OEIC funds through a UK bank account and we haven’t contacted you yet, we will be doing so shortly. In the meantime, please get in touch with your bank to understand your options.

Please reach out to your distributor or regular contact at M&G if you want to further discuss these at any time.

5. What impact could Brexit have on my investments?

As with any other market event, Brexit could result in a period of volatility for markets which may present risks and opportunities. Our fund managers constantly monitor all factors that may impact the long term returns of our clients’ investments, including the political environment, and Brexit is no exception.

For the latest views from our fund managers on Brexit, please visit our blogs: Bond Vigilantes https://www.bondvigilantes.com/, the Equities Forum https://www.equitiesforum.com/ and the Episode Blog https://www.episodeblog.com/.

By M&G Investments

The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. Past performance is not a guide to future performance.

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