LONDON--(BUSINESS WIRE)--Northern Trust (Nasdaq: NTRS) announced today that its world leading custody and fund administration services tailored to support tax transparent pooled funds are ready for the launch of the new UK authorised tax transparent fund (TTF) vehicle, under regulations due to be effective late summer 2012.
The intent to develop the vehicle, first announced in the 2010 UK Budget, was followed by an industry consultation process, in which Northern Trust, a leader in supporting tax-transparent pooled funds, has been actively involved.
The UK tax transparent fund will enable fund managers and institutional investors to pool their assets to achieve cost and administrative efficiencies through withholding tax treaties that exist between countries in which investors are based, and those in which they invest. It is being established to ensure the UK can compete with fund jurisdictions already offering tax transparent fund structures, such as Ireland, Luxembourg and The Netherlands, and becomes the location of choice for master feeder structures under UCITS IV.
“In order for the master-feeder provisions in UCITS IV to be attractive to investors on a cross-border basis, the master fund needs to be a tax-transparent vehicle,” said Aaron Overy, business development, asset pooling and retirement solutions at Northern Trust. “We believe the introduction of a tax transparent fund in the UK would become the natural choice for asset managers already operating large UK fund ranges as well as support UK pension funds wishing to pool all their assets in the UK, and helping life insurance companies mitigate the effects of the Solvency II directive.”
“In addition, we would expect interest from Europe, Asia and US-based asset managers looking to operate a central platform in the UK for their global fund distribution needs,” he added.
Earlier this year, Northern Trust announced results of its research on the compounding impact on performance returns over time from investing in a tax efficient fund structure. Using a model that incorporates dividend taxation rates across a range of popular equity mandates, Northern Trust’s research found that a tax transparent asset pooling vehicle, such as the Irish Common Contractual Fund (CCF) or the Luxembourg Fonds Commun de Placement (FCP), can enhance returns by as much as US$81 million on a US$1 billion portfolio invested in broad market indices over a 10 year period.
“We strongly support the introduction of the UK tax-transparent fund regime and believe it would positively reinforce the UK’s reputation as a world class financial centre,” said Overy. “As other domiciles already have similar vehicles, the introduction of a UK vehicle is important in ensuring that the UK industry can compete on a level playing field.”
Northern Trust is a pioneer in cross-border asset pooling and was the first to fully support tax-transparent funds, created to pool the assets of investors from multiple jurisdictions with multiple tax rates, investing in multiple jurisdictions. As of September 30, 2011, Northern Trust had 25 clients on its tax transparent, global pooling platform, with more than U$61 billion of assets under custody and U$38 billion in assets under administration.
About Northern Trust
Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of investment management, asset and fund administration, banking solutions and fiduciary services for corporations, institutions and affluent individuals worldwide. Northern Trust, a financial holding company based in Chicago, has offices in 18 U.S. states and 16 international locations in North America, Europe, the Middle East and the Asia-Pacific region. As of December 31, 2011, Northern Trust had assets under custody of US$4.3 trillion, and assets under investment management of US$662.9 billion. For more than 120 years, Northern Trust has earned distinction as an industry leader in combining exceptional service and expertise with innovative products and technology. For more information, visit www.northerntrust.com or follow us on Twitter @NorthernTrust.
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