Rathbones clarifies changes to published AUM figures for UK-domiciled and Luxembourg-domiciled funds

As announced on 18 February 2019, Rathbones has made changes to its Luxembourg domiciled SICAV in preparation for a post-Brexit regulatory environment.

As announced on 18 February 2019, Rathbones has made changes to its Luxembourg domiciled SICAV in preparation for a post-Brexit regulatory environment.

Directly-invested funds have been created in Luxembourg for the Rathbone Multi-Asset Total Return, Multi-Asset Strategic Growth, and Multi-Asset Enhanced Growth Portfolio Funds managed by David Coombs and Will McIntosh-Whyte; the Rathbone Income Funds* managed by Carl Stick and Alan Dobbie, and the Rathbone Ethical Bond Funds** managed by Bryn Jones and Noelle Cazalis. These new vehicles follow the same investment strategy as the UK-domiciled funds. This will allow existing investors in the SICAV to continue to maintain their investments.

As a result of these changes, some investors may note a reduction in assets under management (AUM) for the relevant UK-domiciled funds. This is purely a function of some assets being moved from the UK-domiciled funds into the new stand-alone funds based in Luxembourg. The overall AUM in each strategy (incorporating the total AUM for UK-domiciled and the Luxembourg-domiciled funds) will remain largely unchanged, subject to the typical flow dynamics of investment funds.

In 2016, Rathbones established its Luxembourg-domiciled SICAV with feeder sub-funds into the Rathbone Ethical Bond, Rathbone Multi-Asset Total Return, Multi-Asset Strategic Growth, and Multi-Asset Enhanced Growth Portfolio Funds. Later that year, a further sub-fund was launched as a feeder for the Rathbone Income Fund. Until the 25th March, the Luxembourg-domiciled feeder-funds invested into the UK-domiciled master funds. Rathbones expects that after the UK leaves the European Union (EU) the current UCITS status of the master-feeder arrangement will end, thus ending the ability to market the funds in the EU. The decision, therefore, was taken to end the master-feeder structure and create directly invested funds in Luxembourg. All legal, administrative and transaction costs associated with the conversion are borne by Rathbones.

After the UK leaves the EU, Rathbones’ UK domiciled unit trusts and OEICs will be known in the EU as “Non-EEA Alternative Investment funds” (AIFs). Rathbones currently believes that investors in Europe who are invested in any of these funds may be able to continue to do so. However, converting the Luxembourg-domiciled sub-funds into directly-invested funds allows investors to benefit from the same investment strategies and process, and with the same fund managers as before, within a UCITS framework.

*Rathbone Income Fund (income units); Rathbone Income Fund (accumulation units)

**Rathbone Ethical Bond Fund (income units); Rathbone Ethical Bond Fund (accumulation units)

Glossary

SICAV stands for “Société d’investissement à capital variable” and is an open-ended collective investment fund widely used in Europe.

OEIC stands for Open Ended Investment Company. These are open-ended collective investment funds used in the UK.

UCITS stands for Undertakings for Collective Investment in Transferable Securities. The term refers to a regulatory framework, the objective of which was to create a single European market for retail investment funds, while at the same time ensuring a high level of investor protection.

Non-EEA Alternative Investment Fund (AIF) An Alternative Investment Fund (AIF) is currently defined under AIFMD as an investment fund that is not subject to the UCITS Directive, mentioned above. All third country funds are therefore defined as AIFs.

AIFMD.  The Alternative Investment Fund Managers Directive (AIFMD) is the regulatory framework for Alternative Investment Fund Managers (AIFMs), and relates to the management, administration and marketing of Alternative Investment Funds (AIFs).

The information contained in this note is for use by investment advisers and journalists, and must not be circulated to private clients or to the general public. 

 

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