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M&G steps up Lux shift with €10.5bn fund assets transfer

M&G steps up Lux shift with €10.5bn fund assets transfer

M&G Investments is bolstering its SICAV offering by transferring the assets of four flagship UK-domiciled funds to equivalent funds on its Luxembourg platform.

The shift, which totals £9.3 billion (€10.5 billion) in fund assets, is part of the asset manager's plans to pre-empt challenges posed by the UK's exit from the European Union.

M&G announced plans to increase its Luxembourg operations immediately after the June 2016 vote, already proposed to move the flagship fund assets at the end of 2017.

Shareholders will still be invited to vote on the plans which will cover the M&G Dynamic Allocation, Income Allocation, Prudent Allocation and European Inflation Linked Corporate Bond funds.

Assets from these funds will be merged into the M&G (Lux) Dynamic Allocation, M&G (Lux) Income Allocation, M&G (Lux) Conservative Allocation and M&G (Lux) European Inflation Linked Corporate Bond funds, respectively.

Ahead of the vote, the Luxembourg SICAV funds are set to launch on 16 January 2018 due to client demand, with the exception of the M&G (Lux) European Inflation Linked Corporate Bond fund, which will be available once the merger is complete.

While the transfer of assets awaits shareholder approval, M&G has already received approval from the CSSF and the FCA.

Shareholders were notified of the changes on 10 January and have four weeks to cast votes, with the outcome to be announced following the EGM on 9 February 2018.

A vote in favour of the transfer would see full mergers of the four funds taking place on 16 March 2018, the company expected.

The four new funds will replicate the strategies of the current UK-domiciled funds and will be run by the same managers.

Speaking about the decision, Anne Richards, chief executive of M&G said: ‘Following the referendum decision for the UK to leave the European Union, M&G has taken a series of precautionary measures aimed at protecting the interests of our international investors.

‘These measures, which range from building up our SICAV offering to establishing a legal structure in Luxembourg, will ensure that our clients outside the UK retain access to our investment strategies regardless of the final agreement between the UK and the rest of Europe.’

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