CRUX to convert Pease's fund into directly-invested Luxembourg vehicle amid Brexit fears
Converting £1.9bn European Special Sits fund
CRUX Asset Management is planning to convert the Luxembourg-domiciled CRUX European Special Situations "feeder fund" into a directly-invested fund amid concerns around passporting once the UK leaves the European Union on 29 March.
The new directly-invested fund will replicate the UK-domiciled vehicle and will mirror it as closely as possible, although cash positions will vary due to differing flow dynamics and currency.
CRUX said the move had been made due to the lack of concrete guidance around the UK's future relationship with the EU, forcing the firm to prepare for the worst-case scenario.
In this scenario, the firm believes both the fund and the feeder fund will lose their UCITS status once the UK leaves the EU meaning the UK-domiciled fund will become a "non-EU alternative investment fund", as would the feeder fund under the previous structure.
This means the fund will lose its EU passporting authority and will not be distributable across the EU27 countries where it is currently registered.
The firm said this would have led to European investors potentially not being able to continue investing; the new directly-invested fund structure enables them to invest in the fund within the UCITS framework.
CRUX is currently creating a new share class within the fund in order to facilitate a transfer on 8 March, with the Luxembourg-domiciled fund becoming available shortly after.
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Mark Little, distribution director at CRUX, commented: "CRUX is working to make this transfer as efficient as possible for investors and is in the process of establishing a new share class within the UK-domiciled CRUX European Special Situations fund in order to facilitate a transfer on 8 March, or shortly thereafter, when the restructured Luxembourg fund becomes available.
"We believe this is the most practical solution to a situation which remains stubbornly unclear."
The £1.9bn fund, co-managed by CRUX founder Richard Pease (pictured), has returned 37.3% over the past three years versus 32.8% for the IA Europe Excluding UK sector, as at 21 January.
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