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Audience

Protecting your interests during and after Brexit

19/11/2018

What's happening?

We are taking action to ensure the interests of our investors domiciled outside the UK are protected, regardless of the outcome of the Brexit negotiations between the UK and the EU.

Following the approval of our shareholders at the EGMs held on 4 October 2018, we will be transferring the non-sterling share classes of 21 of our UK-domiciled OEIC funds to equivalent Luxembourg-domiciled SICAV strategies.

These merges will protect the interests of our non-UK customers by offering continued access to the current range of M&G Investments strategies.

Since the Brexit referendum in 2016, we have set up a new legal and corporate structure in Luxembourg and built a SICAV platform there to be the home of our strategies for our international investors.

In March 2018, we also transferred all assets in our Allocation range and in the M&G European Inflation Linked Corporate Bond Fund to Luxembourg-domiciled equivalents: M&G (Lux) Dynamic Allocation Fund, M&G (Lux) Income Allocation Fund, M&G (Lux) Conservative Allocation Fund and M&G (Lux) European Inflation Linked Corporate Bond Fund, respectively.

Our priority is to minimise disruption for our investors by providing as much certainty as we can.

More information on the Frequently Asked Questions below.

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Funds and key dates

The splitting of the UK-domiciled OEIC versions of all 21 funds included in this initiative has begun. Funds are being grouped into 4 different phases and the fund mergers will take place over four weekends before the UK leaves the European Union.

To allow the mergers to take place, the UK-domiciled OEIC versions of all 21 funds will be suspended on the Friday before and the Monday after their merger weekend. Their Luxembourg-domiciled SICAV equivalents will be available from the Tuesday after each of their respective merger dates.

Dealing in the following funds will be suspended from 11:30 CET on Thursday, 6 December: M&G Emerging Markets Bond Fund, M&G European Strategic Value Fund, M&G Global Corporate Bond Fund, M&G Global Dividend Fund, M&G Global Floating Rate High Yield Fund, M&G Pan European Dividend Fund.

Any requests to buy or sell the non-sterling share classes of the UK-domiciled fund in this group after this time will be rejected.

Any requests to buy or sell the sterling share classes of the UK-domiciled funds in this group received after this time will not be processed until the next valuation point on Tuesday, 11 December.

To meet client demand, the M&G (Lux) Emerging Markets Bond Fund, the M&G (Lux) Global Floating Rate High Yield Fund, the M&G (Lux) European Strategic Value Fund, the M&G (Lux) Global Dividend Fund and the M&G (Lux) Optimal Income Fund were launched and are available for investment as Luxembourg-domiciled SICAVs ahead of their merging date. These Luxembourg-domiciled funds will not be suspended from dealing on the Friday before the merger weekend but will be suspended from dealing on the Monday after their weekend merger to resume dealing on the Tuesday.

PHASE 1
Non-sterling share classes transferring from these UK-domiciled OEICs … into these Luxembourg-domiciled SICAVs
M&G Asian Fund M&G (Lux) Asian Fund
M&G Episode Macro Fund M&G (Lux) Episode Macro Fund
M&G Global Emerging Markets Fund M&G (Lux) Global Emerging Markets Fund
M&G Global Macro Bond Fund M&G (Lux) Global Macro Bond Fund
M&G Japan Fund M&G (Lux) Japan Fund
M&G Japan Smaller Companies Fund M&G (Lux) Japan Smaller Companies Fund
M&G Short Dated Corporate Bond Fund M&G (Lux) Short Dated Corporate Bond Fund
KEY DATES:
October 2018

Thursday 25:

Last dealing day in the UK-domiciled Funds prior to the Merger Weekend.

Cut-off Time for non-sterling share classes is 11:30 CET. Any requests to buy or sell in the non-sterling classes of the UK-domiciled Funds in this group received after this time will be rejected.

Any requests to buy or sell in the sterling classes of the UK-domiciled Funds in this group received after this time will not be processed until the next valuation point on Tuesday, 30 October.

Friday 26:

Merger Date for Group 1 Funds

A non-dealing date for both the OEIC and equivalent SICAV.

Monday 29: A non-dealing date for both the OEIC and equivalent SICAV.
Tuesday 30: Resume dealing for the remaining sterling classes of the UK-domiciled OEIC funds. First dealing day for the new SICAV funds.
PHASE 2
Non-sterling share classes transferring from these UK-domiciled OEICs … into these Luxembourg-domiciled SICAVs
M&G European Corporate Bond Fund M&G (Lux) Euro Corporate Bond Fund
M&G Global Convertibles Fund M&G (Lux) Global Convertibles Fund
M&G Global High Yield Bond Fund M&G (Lux) Global High Yield Bond Fund
M&G Global Select Fund M&G (Lux) Global Select Fund
M&G North American Dividend Fund M&G (Lux) North American Dividend Fund
M&G North American Value Fund M&G (Lux) North American Value Fund
M&G Pan European Select Fund M&G (Lux) Pan European Select Fund
KEY DATES:
November 2018

Thursday 8:

Last dealing day in the UK-domiciled Funds prior to the Merger Weekend.

Cut-off time for non-sterling share classes is 11:30 CET. Any requests to buy or sell in the non-sterling classes of the UK-domiciled Funds in this group received after this time will be rejected.

Any requests to buy or sell in the sterling classes of the UK-domiciled Funds in this group received after this time will not be processed until the next valuation point on Tuesday, 13 November.

Friday 9: Merger Date for Group 2 Funds
A non-dealing date for both the OEIC and equivalent SICAV.
Monday 12: A non-dealing date for both the OEIC and equivalent SICAV.
Tuesday 13: Resume dealing for the remaining sterling classes of the UK-domiciled OEIC funds. First-dealing day for the new SICAV funds.
PHASE 3
Non-sterling share classes transferring from these UK-domiciled OEICs … into these Luxembourg-domiciled SICAVs
M&G Emerging Markets Bond Fund M&G (Lux) Emerging Markets Bond Fund
M&G European Strategic Value Fund M&G (Lux) European Strategic Value Fund
M&G Global Corporate Bond Fund M&G (Lux) Global Corporate Bond Fund
M&G Global Dividend Fund M&G (Lux) Global Dividend Fund
M&G Global Floating Rate High Yield Fund M&G (Lux) Global Floating Rate High Yield Fund
M&G Pan European Dividend Fund M&G (Lux) Pan European Dividend Fund
KEY DATES:
September 2018

Thursday 20:

M&G (Lux) European Strategic Value Fund and M&G (Lux) Global Dividend Fund available for investment

Friday 21:

M&G (Lux) Global Floating Rate High Yield Fund and M&G (Lux) Emerging Markets Bond Fund available for investment

December 2018

Thursday 6:

Last dealing day in the UK-domiciled Funds prior to the Merger Weekend.

Cut-off time for non-sterling share classes is 11:30 CET.
Any requests to buy or sell in the non-sterling classes of the UK-domiciled Funds in this group received after this time will be rejected.

Any requests to buy or sell in the sterling classes of the UK-domiciled Funds in this group received after this time will not be processed until the next valuation point on Tuesday, 11 December.

Friday 7:

Merger Date for Group 3 Funds A non-dealing date for the OEIC.

Additionally, last dealing day in these Lux-domiciled SICAVs:

  • M&G (Lux) Emerging Markets Bond Fund
  • M&G (Lux) European Strategic Value Fund
  • M&G (Lux) Global Dividend Fund
  • M&G (Lux) Global Floating Rate High Yield Fund

Cut-off Time for the SICAV is 13:00 CET. Any requests to buy or sell for these funds received after this time will not be processed until the next valuation point on Tuesday 11 December.

Monday 10:

A non-dealing date for both the OEIC and equivalent SICAV.

Tuesday 11:

Resume dealing for the remaining sterling classes of the UK-domiciled OEIC funds. Resume dealing for the SICAV funds.

Note: Once the mergers are completed, the sterling share classes of the M&G European Strategic Value Fund, M&G Pan European Dividend Fund and the M&G Global Corporate Bond Fund will be too small for these funds to be viable.

Consequently, the UK-domiciled OEICs for these 3 funds will be closed. If you have invested in the sterling share classes of these funds, you will be given the option to either switch your holdings to other funds in M&G’s UK-domiciled range at no cost, or to redeem at your discretion ahead of the fund closure, otherwise you will be redeemed on the date of the merger.

PHASE 4
Non-sterling share classes transferring from these UK-domiciled OEICs … into these Luxembourg-domiciled SICAVs
M&G Optimal Income Fund M&G (Lux) Optimal Income Fund
KEY DATES:
September 2018

Friday 7:

M&G (Lux) Optimal Income Fund available for investments.

March 2019

Thursday 7:

Last dealing day in the UK-domiciled Fund prior to the Merger Weekend.

Cut-off time for non-sterling share classes is 11:30 CET. Any requests to buy or sell in the non-sterling classes of the UK-domiciled fund received after this time will be rejected.

Any requests to buy or sell in the sterling classes of the UK-domiciled fund received after this time will not be processed until the next valuation point on Tuesday, 12 March.

Friday 8:

Merger Date
A non-dealing date for the M&G Optimal Income Fund (OEIC) and the M&G (Lux) Optimal Income Fund (SICAV). Cut-off time for the SICAV is 13:00 CET.

Monday 11:

A non-dealing date for both the OEIC and SICAV.

Tuesday 12:

Resume dealing for the remaining sterling classes of the UK-domiciled OEIC fund. Resume dealing day in the SICAV.

Frequently asked questions

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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Contact

On 5 September 2018, we sent all documentation relevant to the proposed mergers to our investors, including comparisons of the UK and Luxembourg funds and Key Investor Information Documents for the Luxembourg funds.

Please note that you may have not received this documentation directly if you hold our funds through an intermediary or platform.

You can find copies of the documentation via this link.

We have answered some questions you may have about the proposed mergers and will be updating this website with all relevant information as the process evolves.

If you need any further information in the meantime, please get in touch with your financial adviser or your regular contact at M&G.

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