One issue that continues to intrigue some members of the hedge fund industry in London is whether the government is capable of getting its legislation and tax code in line to attract managers to domicile their products in the UK – and if so, whether that would be enough to attract business that currently goes offshore to Caribbean jurisdictions or the Channel Islands, or onshore to Luxembourg and Dublin (and to a certain extent Malta).

Kinetic co-founder David Butler does not see this as particularly likely, especially when the UK has failed to attract a great deal of retail Ucits fund business despite years of efforts to do so. “The other centres make much more effort in this area, marketing themselves as a more pleasant and relaxed environment in which to base a fund with the attendant tax advantages,” he says. “While the FSA has been keen to promote the UK as a [domicile] for funds, tax issues and higher costs have got in the way.”

Cornish concurs, saying: “Tax is the big thing. We already have rules that enable a manager to form a hedge fund without any investment restrictions from a regulatory point of view, but it’s the tax that is dragging behind, as is often the case. Without that clarity I don’t see people really using those rules. HM Revenue & Customs has not got off the fence and given us a clear picture of what the taxation of those funds would be. Until we have that, I can’t see it taking off.”

But Martin believes that in the new global regulatory environment, and given the upheavals in prospect once the AIFM Directive takes effect, UK-based fund structures may come to play a more prominent role. While most managers that prefer onshore vehicles are looking to Ireland’s Qualifying Investor Fund or Luxembourg’s Specialised Investment Fund, he believes the UK’s Qualified Investor Scheme also has potential.

“If you want a fund that is not subject to the constraints of the Ucits directives on an absolute return fund and might be happy to use derivatives to achieve synthetic shorting, a QIS might be very attractive,” he says. “One reason is that if a UK tax resident invests in an offshore fund, the fund generally has to seek reporting fund status in order for the investor to enjoy capital gains tax treatment when he realises his securities. The quid pro quo is that he would be taxed on the net income of the fund on an annual basis.

“The problem is that if you have a fund that is actively trading with a high turnover of securities or derivatives, a large part of its profit will probably be reportable. In those circumstances, a QIS has the benefit of white-listing, which means that trading activities are likely to be treated as capital activities provided it can demonstrate that it meets the diversity of ownership tests. A QIS might be attractive for people targeting UK tax-resident investors with a very specialised product.”

Martin’s colleague, Dechert tax partner David Gubbay, adds: “There are other reasons why UK management groups might want to have funds onshore. One is that the manager of an offshore fund has an additional compliance burden to ensure it doesn’t bring the fund into the UK tax net. You must have an offshore board that is credible, meets offshore and complies with various other rules, which can sometimes be a hassle and cost the fund additional fees.”

A survey report released by RBC Dexia and Accenture (NYSE: ACN) has revealed that a majority of fund managers expect their company’s return on equity to remain below pre-crisis levels, and a significant number are increasing their focus on cost reduction and product innovation initiatives.

More than half (59 per cent) of respondents forecast a return on equity of 15 per cent or less this year; and 14 percent of those respondents expect return on equity to be less than 10 percent. Prior to the 2008 financial crisis average returns for the funds managed by survey participants was 20 percent.

“Turmoil in the global financial markets has deeply affected the profitability of the investment management industry,” says Rob Wright, Global Head, Product and Client Segments, RBC Dexia. “Falling market prices and a general move away from high margin products to highly liquid, low-fee products have driven down revenues. Our research suggests that fund managers are looking to solutions that allow them to concentrate on their core competencies and provide access to the latest technology necessary to securing front office performance.”

The survey, which involved face-to-face and online interviews with approximately100 fund managers at 80 companies in the United Kingdom, North America, Europe, Australia and the Middle East, also identified a rising trend in outsourcing among asset managers which is seen to help lower costs, improve service quality and support more advanced products to achieve growth.

“The backdrop of low-equity returns and pressure on fees and revenues have made efficient operations a priority for fund managers,” according to Pascal Denis, a senior executive in Accenture’s Financial Services group and managing director of the company’s operations in Luxembourg. “At the same time, their clients are demanding new financial products which have greater clarity of risks, and they would also like to see risks mitigated. This means that products are complex, but in a different way than before the credit crisis.

“All of this is happening in combination with clients expecting to pay lower fees for financial products. Having efficient, scalable operations and access to the new technologies will be a key competitive factor for any fund manager in the years ahead,” adds Denis.

At the same time, more than three-quarters (77 per cent) of respondents said they believe over the next three years the industry will see an increase in outsourcing – ranging from fund accounting and custody to back-office technology and risk management. And while respondents said cost was an important consideration, they also stressed outsourcing is undertaken to deliver operational effectiveness reflected by the primary drivers cited in the research: cost reduction (95 per cent); operational flexibility (84 per cent); and service quality (78 per cent).

RBC Dexia’s Wright says: “Our research indicates that certain outsourcing strategies could lead to cost savings of up to 20-25 per cent for some managers. This trend will appeal to many funds, which are looking to increase operational efficiency and are urgently looking to grow their businesses by launching new and innovative products faster or by expanding into new geographies.”

RBC Dexia Investor Services offers a complete range of investor services to institutions worldwide. Our unique offshore and onshore solutions, combined with the expertise of our 5,400 professionals in 15 markets, help clients grow their business and sustain enhanced performance through efficiency improvements and robust risk management practices.

Equally owned by RBC and Dexia, the company ranks among the world's top 10 global custodians with USD2.8 trillion in client assets under administration. Glasgow-based Ignis Asset Management has removed half of its UK equity team in a move that will see its chief investment office take personal control of turning around performance.

The head of the UK equity desk Neil Richardson is to leave the firm along with three other UK equity managers Finlay MacDonald, Gary McAleese and John Stewar, according to New Model Adviser® sister publication Citywire Wealth Manager.

It has reported Ignis' chief investment officer for equities Mark Lovett will take responsibility for at least one fund and will make turning around performance of the group's retail and life assets invested in UK shares his personal priority. He joined the firm in September 2010 from Allianz RCM.

A number of fund managers remain in place including Ralph Brook-Fox who runs the Ignis UK Focus fund and David Clark who runs the group fund UK Smaller Companies fund. Edward Bramson spent Friday, the day after he took over as F&C Asset Management's chairman, meeting key fund managers and staff across the company. He told them that he had "no preconceived" plans for the business following his boardroom coup at the company.

Edward Bramson sets out his stall to F&C shareholders

Bramson admits he and his 'research function' have spent 18 months painstakingly scruntinising every inch of F&C.

Bramson has heavy support from institutional investors. Late last week David Lis, head of UK equities at Aviva, told The Daily Telegraph: "We are long-term admirers of Sherborne.

"We believe that that there is a great deal of inherent value in F&C that has not been realised. A different approach can yield significant rewards".

Bramson's plans are likely to include a heavy cost-cutting programme. So much for the aggressive conqueror. Edward Bramson may have hunted F&C Asset Management relentlessly, but when it came to the kill it was more like watching the lamb's search for the lion.

Private shareholders pitched up in droves at F&C's general meeting on Thursday to meet the boss of Sherborne Investors which was about to depose of their board. But in the event he was hard to find.

Related Articles

Kishim Navani, a small shareholder, spoke for them all when he asked Nick MacAndrew, the asset manager's chairman-cum-quarry: "Who is Edward Bramson? What experience does he have? What is his track record? What does he want?"

MacAndrew shrugged and said he didn't really know. "But he is here," he reassured them, pointing at the front row.

Necks strained to look at the back of a head, whose thining, grey hair didn't divulge much.

A microphone was thrust into Bramson's hand. Staying firmly rooted to his seat, he mumbled something. "Speak up," shouted one investor. "Can't hear you," yelled another.

MacAndrew urged him to take to the chairman's lecturn – did he want the position or not?

Once there, the neat little man looked even more uncomfortable. He whispered that he hoped to bring "a fresh perspective" to the board but otherwise referred investors to the websites of Sherborne and the US Securities & Exchange Commission for more information.He stalked off, waving a dismissive hand at the investors' baffled responses.Up close, Bramson is less alarmed and far more collected.

It is moments after his victory has been announced and he is as good as in charge of Britain's fourth biggest fund manager and its £108bn of assets, 70,000 investors and 1,000 staff. He affords himself a thin smile.

So do you enjoy ousting company chairman?

A rare laugh escapes but he quickly corrects himself. "No I do not enjoy it," he says in his soft American drawl.How about the shareholders' question: what are you going to do?

"I'm not being evasive but I don't honestly know what we're going to do," he says. "We want to meet the board and spend the next few months developing a strategy."

Why F&C? Bramson has done many corporate turnarounds before but never in asset management.

"We screen companies all over the world, mostly in the US. We use our research function to look for opportunities," he says.It's not clear why Bramson wants to make this all sound haphazard. Because, obviously, it's not.

After more questioning he admits that he and his "research function" have spent 18 months painstakingly scruntinising every inch of F&C. He says he "made the decision to invest in April".

So for nine months Sherborne stalked the company, building up a 9.9pc stake plus another 7.6pc in contracts for difference. These were converted into voting shares ahead of the general meeting which he called in December.

The requisitioning may have been the starting gun for F&C's MacAndrew but for Bramson and Sherborne, victory was already in the bag.Over Christmas and into January, F&C's board dashed about, seeing its institutional investors, promising reform, cost savings and efficiencies while warning of the dangers of Sherborne. But they were trailing in Bramson's wake; plenty - including Aviva - had already pledged allegiance to the rebel.

One source close to Bramson said: "He leaves nothing to chance, every detail is carefully considered and worked out. He is thorough and everything is done before anyone else knows about it."

Perhaps even Bramson recognises that there's chance he could come across slightly, well, mechanical. He addresses a few personal questions."I was born in London but I moved to New York in 1975 so I've been there over 30 years," he says. He's married to an American, they have no children but "we have horses" which is why he says he won't be relocating to London to look after F&C.When it's suggested to him that might not impress F&C's private investors, already among the most tested in the industry after years of upheaval at the company, he shrugs."I have a business in Port Oregon [on the west coast of America] - so that's just as far from New York as London is," he says.Bramson, 61, founded Hillside Capital in New York in 1977 as one of the first specialist private equity firms in America. Sherborne was founded in 1986 to invest in and turnaround both private and publicly listed companies.

He co-founded another business in 2002 but, according to his website, he "withdrew in June 2006 to focus on Sherborne's international activities".The biography on Sherborne's website, to which he directed F&C's investors, describes Bramson as being "responsible for operational turnarounds at portfolio companies in the chemicals, consumer products, electronics, media and packaging industries and pioneered many of today's accepted buyout techniques".He's had mixed results. He was chairman of Ampex Corporation, a Nasdaq-listed manufacturer of digital devices from 1992 to 2007 after which the firm filed for Chapter 11 bankruptcy protection. In the UK, he ran Elementis, the chemicals company, and 4imprint, both of which were London listed.Institutions, including Aviva, made large amounts of money from his efforts – which is why they are so keen to hand him F&C.