Brexit: Survey shows concerns around UK funds

A PEI survey of alternative assets professionals indicates less interest in UK funds and a negative effect on almost half of businesses.

Almost half of alternative assets professionals canvassed by PEI, the parent company of Private Debt Investor, said their business had suffered as a result of the UK’s vote in June to exit the European Union (EU).

Asked what effect the vote would have, 42 percent said it would be negative, with 22 percent viewing it as a positive development and 24 percent neutral.

The effect on the UK market may be especially marked. Almost half of respondents (41 percent) said commitments to UK-focused funds would decline in the aftermath of the vote with only 15 percent predicting that allocations to such funds will continue as normal.

This was in almost direct contrast to the likely experience for European-focused funds, with 41 percent expecting allocations to continue as normal and just 18 percent predicting a decline in allocations.

Furthering the impression of Brexit’s negative impact, it was cited as the biggest concern by respondents from a list of ten other concerns – with the possible election of Donald Trump in the US and the emergence of negative interest rates in joint second place.

Two-thirds of those asked (67 percent) said they expected financing conditions to tighten, while 33 percent thought they would not.

However, the survey was far from doom and gloom. More than half (54 percent) thought there would be no impact on alternatives allocations generally, with 17 percent expecting an increase and only 6 percent a decrease.

Moreover, almost half (44 percent) said that in their view investment activity would not be affected, with only 11 percent anticipating a dramatic halt.

While has there has been much speculation about companies moving staff around in the wake of the vote, such a development is not foreseen to any significant degree in the survey. Fifty-seven per cent said the location of European workers would not be reconsidered, with 12 percent saying it would.

Fundraising news appears mixed, with more than half (55 percent) saying that limited partners (LPs) would continue supporting fundraising efforts regardless of Brexit. But a total of 34 percent said that LPs were either standing still or making new demands, while a further 11 percent said they would wait longer before starting their next fundraising.

The survey received 337 responses from fund managers, LPs, service providers and law firms. One-third (33 percent) were based in the UK, 28 percent in the US, 23 percent in Europe (ex-UK) and 16 percent in the rest of the world.