Northern Trust Asset Management says up to 40 per cent of its institutional clients are asking for UK assets to be ringfenced from their broader European portfolios due to better manage Brexit risks.
The requests are usually from non-European clients and include sovereign wealth funds, Reuters reports.
“Instead of having their European equity and fixed income exposure to include the UK, they are saying can you please ringfence UK exposure,” says Wayne Bowers, CIO for EMEA and Asia Pacific, who helps manage $1trn.
Similar ringfencing took place during the global financial crisis when investors sought to segregate financial industry assets out of broader equity portfolios.
“They want it segregated, recognising they may want to take an extra asset allocation position – either increase or decrease – but they want to be able to do that without impacting their broader European exposure,” Bowers says.
Northern Trust announced last week that it will be moving operations to Luxembourg as the UK exits the EU.