New fund manager research from State Street gives Britain a hint of hope post-Brexit

Within an overall negative outlook for Britain's fund management sector post-Brexit, State Street finds some optimism in its latest research.

By Jonathan Watkins

Nearly a quarter of survey respondents in new research from State Street believe that more European-based fund managers will look to open offices in the UK after Brexit.

The report surveyed 100 institutional and alternative investors comprising hedge funds, real estate funds and private equity firms to analyse the outlook for the UK fund management industry after it finalises its exit from the European Union.

Within an overall negative outlook for Britain post-Brexit in State Street’s findings, there was some optimism in the numbers.

More than half believe UK authorities will make it more appealing to open London offices post Brexit.

A third of survey respondents or 34% believe there will be an increase in merger and acquisition activity within the fund management sector as European fund managers look to acquire UK-based firms to give them a presence in the local market post-ccBrexit.

Meanwhile, 15% think non-UK European based fund managers who already have offices in the UK will add to their number of employees in the UK as a result of Brexit

“Our research suggests that, despite the headwinds and complexity that Brexit is causing, the UK is still a hub for a tremendous amount of investment management expertise, and an attractive centre for fund management activity in Europe,” said Brian Allis, head of State Street Global Services’ EMEA product team. “It is reassuring to see that, however negative the outlook for the UK fund industry may be right now, investors still want to maintain and grow their presence locally.”

One in six (17%) investors expect UK investment managers to oversee an increase on the £9.1trn of assets recorded at the end of 2017 within a year of Brexit taking place.

Interestingly, those based in continental Europe (19%) are more confident of this happening than those based in the UK (15%).

The main reason given by professional investors as to why non-UK based fund managers might expand their operations in the UK post Brexit, is the belief that the UK is home to a huge amount of investment management expertise and knowledge which they want access to. This was highlighted by 84% of respondents.