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.
LEGAL STRUCTURE AND REGULATION |
|
OEIC |
SICAV |
Definition |
Open-ended investment company (UK-domiciled) |
Société d'investissement à capital variable (Luxembourg-domiciled) |
Background |
Commonly used in the UK, also used in Western Europe and other regions
Introduced in the UK in 1997 as a flexible alternative to unit trusts
|
Commonly used in Western Europe, also in other regions
Introduced early in the last century
|
Legal structure / UCITS |
An OEIC can be established as an umbrella company with a number of sub-funds, or as a stand-alone fund
It can issue a range of shares, including hedged shares
It can be established as a UCITS or retail non-UCITS
|
A SICAV can be established as an umbrella company with a number of sub-funds, or as a stand-alone fund
It can issue a range of shares, including hedged shares
It can be established as a UCITS or retail non-UCITS
|
Regulatory authority |
Financial Conduct Authority (FCA), in the UK |
Commission de Surveillance du Secteur Financier (CSSF), in Luxembourg |
Corporate governance |
The Authorised Corporate Director (ACD) is responsible for the day-do-day operation of the OEIC |
A SICAV can have a specific management company or be managed by its Board of Directors |
Role of Depositary / Custodian |
A Depositary is responsible for the custody of fund assets
The Depositary is also responsible for oversight of the ACD to ensure the interests of investors are protected
The Depositary and ACD must be completely independent
|
A Depositary (Luxembourg-based) is responsible for the custody of fund assets and ensuring the interests of investors are maintained
The Depositary is also responsible for oversight of the investment to ensure the interests of investors are protected
|
Segregation of liability between sub-funds |
Legislation to allow the segregation of liability between sub-funds in an umbrella OEIC provided for under UK law |
Segregation of liability between sub-funds is provided for under Luxembourg law |
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