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New regulation expected to strengthen UK fund domicile

kiwi_fruit_slicesThe UK’s Investment Management Association says the introduction of a protected cell regime for open-ended investment companies will enhance the country’s competitiveness as a fund domicile.

The legislation, the trade body says, ensures that the assets of each sub-fund in an Oeic umbrella fund are ring-fenced from the other sub-funds. This means one sub-fund cannot draw upon the assets of another to cover its liabilities.

Julie Patterson, the director of authorised funds, says the risk of a sub-fund ending up with more liabilities than assets is “miniscule”.

The new regulation, however, removes the potential for cross liability between sub-funds.

“[It] is therefore a further welcome step to improve investor confidence and to enhance the competitiveness of the UK as a key fund domicile,” she says. “This, together with the launch next year of tax-transparent funds, cements the UK’s position as a fund domicile of choice.”

©2011 funds europe