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Money Management

Managers reshaping distribution strategies in light of Brexit – survey

The U.K.'s pending exit from the European Union is pushing money managers to reshape their distribution strategies and locations for recruitment.

The State Street 2018 Fund Strategy Survey, which gathered 250 responses from money management firms across 15 countries, found 54% of managers are in the process of reshaping their distribution strategies because of Brexit. A further 19% already have done so, while another 19% expect to do so in the next five years. The remaining 8% said no action had been taken or they did not expect to make changes to distribution strategies.

Regarding hiring, 54% expect to hire staff in a new location in the next five years, while 21% are in the process of doing so. Eighteen percent do not expect to or have not made changes, and the remaining 7% already have taken action.

With Brexit negotiations underway, 46% of respondents expect to see increased fragmentation of fund regulation in Europe over the next five years.

The survey also found that 51% of managers are planning to target the U.K. as a future domicile of choice for the distribution of strategies, up from 42% now using the U.K.

Respondents also were surveyed on the impact of the Markets in Financial Instruments Directive II, which has brought new requirements to money management including the separation of payments for research and execution.

When asked if Europe will lose ground to Asia as a hub for cross-border fund distribution, 36% strongly or somewhat agreed; 32% were neutral; 1% did not know; and the remaining 31% strongly or somewhat disagreed.

"Asset managers must stay nimble to thrive in this new market environment," said Liz Nolan, CEO for Europe, Middle East and Africa at State Street, in a news release accompanying the survey. "The impact of Brexit is complex, particularly given the uncertainty surrounding negotiations. Our findings highlight how asset managers are proactively tackling the challenges it presents, and safeguarding their ability to support clients, remain competitive and access markets in a post-Brexit world."