EUROPE – The UK government has sought to promote two new tax-transparent funds (TTFs) aimed at rivalling other European UCITS-compliant vehicles.
Coming as part of the Treasury's investment management strategy launched at this year's Budget, the government said it hoped the TTFs – acting as a "master feeder" to allow for local investors to be taxed in their home domicile, not in the fund's country of origin – would attract investment from institutional investors such as pension funds.
The Treasury highlighted in a statement that investors would benefit from the economies of scale of a single fund, in turn potentially lowering management fees.
"It should also help diversify investments in order to manage risk," the department added.
The Treasury said pension funds, due to their tax-exempt status, would be able to see increased returns, as the structure would reduce foreign withholding tax – often an issue when investing in funds with less transparent disclosure requirements.
At an event hosted by the Investment Management Association, the Treasury detailed that investors would be able to choose between two approaches for the funds – either co-ownership or a partnership model.
Commenting on the new structures, financial secretary to the Treasury Greg Clark said: "We already have an investment management industry that is a world leader, and the launch of the two tax transparent funds should strengthen the UK's position as a leading choice for fund domicile."
The Authorised Contractual Scheme (ACS), as the TTF is known, is set to rival other UCITS-compliant pooling vehicles used by institutional investors developed by the Netherlands, Luxembourg and Ireland.