Deutsche Asset Management (DeAM) has announced the launch of the Deutsche GlobalSpectrum Common Contractual Fund (GlobalSpectrum CCF), the first fund enabling UK institutions investing in US equities to benefit from both the lower costs of a pooled fund and the withholding tax breaks previously limited to segregated equity.
State Street Corporation has been appointed investment service provider for the fund.
The GlobalSpectrum CCF is aimed at small- and medium-sized UK pension fund investors for whom holding a portfolio of US equities has not previously been financially viable. This fund is the first of its kind to take advantage of regulatory changes in Ireland, where the fund will be domiciled, which allow for pooled funds to receive US equity dividends free of US withholding tax, a spokesman for Deutsche Asset Management said. This new structure will result in annual savings of 30 basis points — a significant savings in the context of a pooled fund investing in US equities, the company said.
Currently DeAM has clients with assets totaling GBP 128.6 million immediately ready to invest in the fund, with an expectation that the open-ended fund may reach total assets under management of approximately GBP 500 million once all interested clients move their assets from other portfolios, according to DeAM.
Paul Berriman, UK CEO of Deutsche Asset Management said, “Until now, many small-and medium-sized institutional investors who wanted to take advantage of liquidity and growth opportunities in the US market have been unable to do so because they would have suffered withholding tax charges. Deutsche, already the largest pension fund manager in the UK, is pleased to be the first to offer this lower cost pooled fund, taking advantage of recent regulatory changes in the Republic of Ireland.”
The CCF structure also has the potential to be used by DeAM to benefit pension funds domiciled in jurisdictions other than the UK, it said.
Deutsche Asset Management operates in over 60 countries around the world and manages Eur 589.9 billion, or $733 billion, of assets as of March 31