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Value of UK ACS funds to reach GBP250bn by 2017, says Northern Trust poll


The value of UK Authorised Contractual Scheme (ACS) funds under management in the UK is likely to exceed GBP250 billion by 2017, according to a Northern Trust survey of UK based finance professionals.

Nearly half of the approximate 50 delegates who were surveyed at a recent seminar hosted by Northern Trust in London predicted the growth surge in assets for the ACS, the UK’s first regulated tax-transparent funds regime. A further 22 per cent of delegates predicted the value would reach the GBP500 billion mark.
“The ACS is gaining significant momentum and interest,” says Toby Glaysher (pictured), head of Global Fund Services, Northern Trust, Europe, Middle East and Africa. “This growth is being fuelled by a number of factors including tax efficiencies, economies of scale and broader distribution opportunities. The advent of Solvency II is also prompting insurers and asset managers to re-evaluate the fund structures they use.”
According to half the delegates, the UK’s extensive double taxation treaty network was the UK’s main strength in attracting tax-transparent fund business, followed by its strong regulatory environment (23 per cent). Just over half (55 per cent) of delegates said tax efficiency was the key driver for launching an ACS, followed by fund rationalisation (26 per cent) and the ability to sell into multiple jurisdictions (15 per cent).
“The ACS’s transparent structure means investors benefit from applicable tax treaties and are treated as if they were a direct investor into those assets,” says Phillip Caldwell, global head of cross-border pooling product at Northern Trust. “This removes tax drag resulting in better outcomes for investors and higher fund values for investment managers. Our poll shows there is also a growing awareness of its other benefits across fund rationalisation, regulatory and reporting, and distribution outcomes.”
Northern Trust has been supporting European tax-transparent funds since 2005 when the industry’s first vehicles were launched in Luxembourg and Ireland. Northern Trust supported the development of the UK ACS through participation in multiple HM Treasury working groups. It provides a range of servicing solutions for investment managers, insurers and multinational pension funds including project management for onboarding tax-transparent funds, fund administration, depositary, global custody and specialist tax-transparent fund accounting services.

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