Northern Trust Poll: Value of UK Authorised Contractual Scheme Funds Likely to Reach GBP250 Billion by 2017

Double Taxation Treaty Network UK’s Key Strength in Attracting Tax- Transparent Funds

LONDON, Nov 11, 2015 (BUSINESS WIRE) — 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 percent of delegates predicted the value would reach the GBP500 billion mark.

“The ACS is gaining significant momentum and interest,” said Toby Glaysher, head of Global Fund Services, Northern Trust, Europe, Middle East and Africa. “This growth is being fueled 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 percent). Just over half (55 percent) of delegates said tax efficiency was the key driver for launching an ACS, followed by fund rationalization (26 percent) and the ability to sell into multiple jurisdictions (15 percent).

“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,” said 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 rationalization, 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.

About Northern Trust

Northern Trust Corporation NTRS, +0.17% is a leading provider of wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust has offices in the United States in 19 states and Washington, D.C., and 20 international locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of September 30, 2015, Northern Trust had assets under custody of US$6 trillion, and assets under management of US$887 billion. For more than 125 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Visit northerntrust.com or follow us on Twitter @NorthernTrust.

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