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Money managers under the microscope
Odey to stay in the UK
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So Odey Asset Management isn’t going to be leaving the UK after all.
CEO David Stewart told me today that the firm, which is planning to open a Swiss office, will “always have operations in the UK”, despite government plans for a 50 percent tax rate on top earners.
Nevertheless, the Sunday Times interview with Crispin Odey reflects the frustration many in the hedge fund industry feel from a combination of higher taxes and what they perceive as the UK’s failure to protect them from tougher EU rules, driven by the French and Germans.
Meanwhile, whilst the group will be keeping an office in the UK, this does not show tell us the future spread of its operations and whether London will be its only base for fund managers or merely one of several centres.
Odey’s moves are already closely observed in the City. He made an early call on the start of a new bull market, which has so far proved very profitable. You can be sure the City will be watching what his firm does too.
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Odey scaling down activities in the Uk could be the beginning of a financial exodus from the City with many more to come. These tax measures could do serious harm to London’s position as Europe’s leading international financial centre.
London’s losses have resulted in its competitors gains, for example Dubai which has developed the Dubai International Financial Centre (DIFC) which is the world’s fastest growing international financial centre. It aims to develop the same stature as New York, London and Hong Kong, and will embrace all the companies planning to leave the city.
I don’t get it – apart from the opportunity for some cheap publicity, of course. The tax increase can’t cut his income by more than 17%. But the biggest part of any hedge fund manager’s income comes from bonuses linked to his fund’s performance fees. How many managers have seen their income from performance fees fall by as _little_ as 17% over the past two years?
I actually sold stuff for a living, but variations in the state of the market and in the exchange rate affected my royalty payments far more than tax changes – why do hedge fund managers appear to live in a different universe?