Welcome to the latest edition of our Funds Update.
The investment management sector covers a wide range of services including asset management, institutional and advice services, and custody and investment administration services. A number of trends are driving change in this sector: for example, low interest rates and a shift towards passive investing and technological developments. The regulators are trying to keep up and we discuss below some of the FCA's key priorities for the sector under its Business Plan for 2019/20.
We also consider pre-marketing rules and the challenges they will present for the cross-border distribution of alternative investment funds, as well as the new UK tax regime for the disposal of interests in UK land and buildings.
Globally, another major trend is an increasing focus on sustainability. We are very pleased to have the thoughts of Barry Lawson and Charlotte Lawson of the Private Equity Consultancy on ESG management systems to drive value.
If you would like to discuss any of the topics covered in this Update, please contact one of the experts listed below.
FCA Business Plan 2019/20 | Funds focus
The FCA's strategic objectives and priorities for the year ahead are set out in its Business Plan for 2019/20, which was published on 17 April 2019. The Business Plan is organised by cross-sector priorities, as well as individual sector priorities.
Asset managers will face greater regulatory scrutiny on a number of levels, from fund governance rules around the duty to act in the best interests of investors, to new prudential regulation, stewardship obligations, and compliance with MiFID II product governance obligations.
Facilitating cross-border distribution of investment funds | European Parliament backs proposals including new pre-marketing rules
On 18 April 2019, the European Parliament backed the European Commission's proposal for a package of measures to reduce barriers to the cross-border distribution of investment funds The legislative package is due to be adopted by the European Council and Parliament later this year, to come into effect in 2021.
In this article, we focus on the introduction of a new concept of pre-marketing AIFs, and examine the implications of this change.
Creating and implementing ESG management systems to drive value
Investors increasingly expect that pre-investment due diligence will include a thorough understanding of the environmental, social and governance impacts of a potential investment, of where improvements can be made and where risks can mitigated.
In this article, Barry Lawson and Charlotte Lawson of The Private Equity Consultancy suggest that good due diligence is only one part of an ESG programme that PE fund managers need to develop. They set out in this insight a route map that will embed ESG considerations into a fund manager’s DNA.
A brave new world | UK real estate funds and the new non-resident capital gains tax on UK land
April 2019 saw the introduction of a new regime taxing non-residents on gains on the direct and indirect disposal of interests in UK land and buildings. This new regime is the latest step in a series of changes over the past few years that have brought non-residents into the UK tax net.
The move reflects a desire by the UK tax authorities to have a level playing field between residents and non-residents.
Leverage for AIFMD purposes | response to IOSCO Consultation Paper
The BVCA has contributed to an industry response to a consultation, published by The International Organisation of Securities Commissions, on creating metrics to help regulators measure the systemic risk posed by leveraged investment funds.
The BVCA and others have called on IOSCO to acknowledge explicitly the particular circumstances of institutional closed-ended funds. In this article, we consider the process proposed by IOSCO and views of the Invest Europe and the American Investment Council.