London under threat as funds capital – Nabarro

The future of London as the fund management capital of the world is secure for the next three years say 96% of asset managers, but faces multiple threats to its dominance over the next decade according to a survey from commercial law firm, Nabarro.

The UK’s relatively benign regulatory environment scores highly as a positive influence for the fund management industry in favouring London. Its physical location as a hub between the Far East, Asia and the Americas and the use of English as a common business language are also cited as significant positives.

Looking 10 years ahead, however, only 60% of asset managers believe London will remain a pre-eminent centre for fund management. Despite the short term positive outlook, asset managers believe that increased regulation combined with fee pressure and competition from emerging markets will put pressure on the industry and undermine London’s leading role. The tax environment is also seen as a deterrent by 74%.

Commenting on the results of the survey, Alasdair Steele, partner at Nabarro and head of the commercial law firm’s Financial Institutions Group, said:

“Asset managers are predicting that London faces a challenging future, with threats ranging from the competition and regulatory arbitrage of competing markets, to fund and fee pressure from investors demanding increasing returns in a low-yield and low growth environment. Emerging markets look set to have their day both as destinations for investment products and as growing financial centres in their own right. Meanwhile the asset management industry is predicted to undergo a period of simultaneous fragmentation and consolidation.

“While London may not have it all its own way in the next decade, if it retains its entrepreneurial spirit, the capital’s asset management sector will continue to set the pace, adapt and thrive.”

Click here to read full report: What does the future hold?

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