The company, which Davies joined in 1995 as chief investment officer, will continue to be managed by chief executive Crispin Henderson.
The outgoing chairman has held a number of senior roles at Threadneedle, becoming chief executive in 1999 before taking on the chairmanship in 2007.
Jim Cracchiolo, chief executive and chairman of Threadneedle parent company Ameriprise Financial, says: “Simon has had a long and distinguished career at Threadneedle and I’d like to thank him for his exceptional contribution to both Threadneedle and Ameriprise Financial.
“In addition, we appreciate his good work to orchestrate a smooth transition of leadership, which began when Crispin Henderson became CEO in 2007.”
He adds: “I feel very good about the depth of talent as well as the strength and continuity of the leadership team that Simon helped build at Threadneedle.”