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Investment managers plan gross roll-up products Back  
Investment product developers are currently brainstorming on schemes to reflect the new ‘gross roll up’ regime for taxation of funds, as outlined in the Finance Bill. David Conway, director of personal investments at Ulster Bank, says that although the old regime was ‘very efficient both from the customer and Government revenue collection point of view’, the new rules will have their benefits. Recognising that the development might have been necessary for IFSC considerations, Conway, says that it has several implications for domestic business.

‘There’s an extra level of confusion from the customer point of view, although ultimately, they will probably be better off, particularly if they’re in for the long term. Unfortunately, it also places a bit of an onus on the administrator who has to reengineer the whole process’.

According to Rory Quinlan, head of operations for personal business at bank of Ireland Asset Management, the new system will create a level playing field. ‘It will allow funds to compete. The fact that we have no tax on these funds going forward make them more marketable’.

Conway says that one of the main benefits for the customer will be an easier access to stock markets through a managed fund. Previously, each time an investment manager decided to sell an equity in a fund, he or she invoked a taxable charge, referred to by one manager as ‘a bit of a drag on the fund’. Now that this has changed, more investor interest in managed funds might be expected. At Ulster Bank, Conway says that money market funds will be given a boost by the new rules, particularly as US habits of using them as vehicles for corporate cash management are followed.

Conway says that Ulster Bank will make efforts to maintain existing funds for investors who want this to be the case, while also developing ‘mirror’ products to be launched in 2001.

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