Protecting your interests during and after Brexit

We are taking action to ensure the interests of our investors domiciled outside the UK are protected, regardless of the outcome of the Brexit negotiations between the UK and the EU.

Following the approval of our shareholders at the EGMs held on Thursday 4 October 2018, we have begun the transfer of the non-sterling share classes of 21 of our UK-domiciled OEIC funds to equivalent Luxembourg-domiciled SICAV strategies. Twenty of these mergers are now complete. 

These mergers will protect the interests of our non-UK customers by offering continued access to the current range of M&G Investments strategies.

Since the Brexit referendum in 2016, we have also set up a new legal and corporate structure in Luxembourg and built a SICAV platform there, to be the home of our strategies for our international investors.

In March 2018, we transferred all assets in our Allocation range and in the M&G European Inflation Linked Corporate Bond Fund to Luxembourg-domiciled equivalents: M&G (Lux) Dynamic Allocation Fund, M&G (Lux) Income Allocation Fund, M&G (Lux) Conservative Allocation Fund and M&G (Lux) European Inflation Linked Corporate Bond Fund, respectively.

Our priority is to minimise disruption for our investors by providing as much certainty as we can.

More information on the Frequently Asked Questions below.

The splitting of the UK-domiciled OEIC versions of all 21 funds included in this initiative has begun. Funds have been grouped into 4 different phases and the fund mergers are taking place place over four weekends before the UK leaves the European Union. Three phases were completed in 2018, and there is one fund in the final phase set for March 2019.

To allow the final merger to take place, the UK-domiciled OEIC version of the M&G Optimal Income Fund will be suspended from 11:30 CET on Thursday, 7 March 2019.

Any requests to buy or sell the non-sterling share classes of the UK-domiciled fund in this group after this time will be rejected.

Any requests to buy or sell the sterling share classes of the UK-domiciled funds in this group received after this time will not be processed until the next valuation point on Tuesday, 12 March.

To meet client demand, the M&G (Lux) Optimal Income Fund was launched and is available for investment as Luxembourg-domiciled SICAV ahead of its merging date. This Luxembourg-domiciled fund will be suspended from dealing from 13:00 PM CET on Friday, 8 March 2019. Dealing in the M&G (Lux) Optimal Income Fund will resume on Tuesday, 12 March 2019.

Note: Once the mergers are completed, the sterling share classes of the M&G European Strategic Value Fund, M&G Pan European Dividend Fund and the M&G Global Corporate Bond Fund will be too small for these funds to be viable.

Consequently, the UK-domiciled OEICs for these 3 funds will be closed. If you have invested in the sterling share classes of these funds, you will be given the option to either switch your holdings to other funds in M&G’s UK-domiciled range at no cost, or to redeem at your discretion ahead of the fund closure, otherwise you will be redeemed on the date of the merger.

Q: What is happening?

A: On 5 September 2018 we wrote to investors in the non-sterling share classes of 21 our UK-domiciled funds with a proposal to fully merge the assets in these share classes with equivalent Luxembourg-domiciled funds.

These proposals were subject to shareholder approval, which was attained at a series of Extraordinary General Meetings held on 4 October 2018.

Q: Do I need to do anything?

A: If you wish for your assets to be transferred to the new Luxembourg-domiciled funds, you don’t need to do anything. All shareholders remaining in the non-sterling share classes of the funds impacted after 11.30h CET on the Thursdays prior to the merging dates – all key dates included in the calendar above – will be merged into the new funds.

Q: I voted against the proposals. Will my assets still be merged into the new Luxembourg-domiciled funds?

A: Resolutions of shareholder votes are binding for all investors in the funds. As mergers have been approved by the majority of shareholders, all investors remaining in the non-sterling share clases of the funds impacted after 11.30 CET on the Thursdays prior to the merging – all dates in the calendar above – will be merged into the new funds.

Q: What should I do if I don’t want my assets to be merged into the Luxembourg-domiciled funds then?

A: If you don’t wish for your assets to be transferred to the Luxembourg funds, you can redeem or transfer your assets in the merging share classes to other M&G funds or funds from other providers before 11.30h CET on the Thursdays prior to the merging – all dates in the calendar above.

Q: What happens with buy or sell instructions given during non-dealing days?

A: Any instructions will be carried out at the valuation point on the Tuesday following the weekend of each fund’s merger. Please refer to the calendar above for all key dates surrounding the mergers.

Q: What are the cut-off and valuation times for OEICs and SICAVs?

A: Cut-off and valuation times for OEICs happen at 11.30 CET. For SICAVs, these happen at 13.00 CET.

Q: Will the new Luxembourg-domiciled funds follow the same investment strategies and be managed by the same investment teams?

A: Yes. 

Q: Will the equivalent Luxembourg funds have the same management fees?

A: The Annual Management Charge will be the same, but OCF might be slightly higher for a combination of Luxembourg’s taxe d’abonnement and smaller fund sizes. Luxembourg’s taxe d’abonnement is 0.05% per annum for retail investors and 0.01% per annum for institutional investors. The reduced size of the new SICAVs is not expected to have a material impact on the OCF, but in the worst case is forecasted to increase by 0.02%. In total this may mean that the OCF could increase by 0.07%.

Q: Will the new SICAV funds retain the performance track record of the original OEIC funds?

A: Yes, once the mergers are complete.

Q: Will shareholders in the funds receive the same shares they held in the new funds?

A: Shareholders will receive new shares in the Luxembourg-domiciled funds of the same class and type as their existing shares in the UK-domiciled funds.

Q: What are the ISIN codes for the OEICs and SICAVs equivalents in the funds impacted?

A: You can find all ISINs here

Q: Will investors buying into the newly launched SICAVs get the same portfolio as their equivalent OEICs?

The funds will be run by the same investment teams and will follow the same investment strategies. Their portfolios may not be identical as they will receive different flows, have different assets under management, operate under different tax rates, etc. 

Q: What if I hold a fund which is not transferring to Luxembourg and doesn’t have a Luxembourg equivalent?

A: The vast majority of M&G funds being promoted outside the UK have already transferred or will be transferring to Luxembourg with this initiative. We will contact investors in any funds with no Luxembourg equilavent with our plans in due course. In the meantime, please note that UCITS passporting rights for OEIC funds will remain in place at least until the end of March 2019.

Q: What are the differences between OIECs and SICAVs?

A: For most practical purposes, the OEIC and SICAV structures are very similar, both offering the ability to establish umbrella companies with a number of single-priced sub-funds.