Prime Minister Theresa May has confirmed the UK will exit the single market and the customs union when it leaves the European Union. May has promised to trigger the Article 50 exit procedure by the end of March. She is aiming to negotiate a new free trade agreement with the EU over the two-year exit period and was open to the idea of a transitional agreement beyond 2019.

Most Ucits funds are set up in Luxembourg or Dublin and can be passported around the EU with management delegated to London. Lawyers expect that to continue when the UK leaves the EU.

Most UK hedge funds use a Cayman AIF, which are allowed to market into the single market using private placements and is being assessed for a fund passport.

UK managers will need to ensure they are using AIFs registered in jurisdictions where they can market into the single market.

“If you have a branch of your London business into European then you would need to re-authorise it as a locally regulated business,” says Peter Astleford, partner at Dechert. “If you have no branch then you may, for safety, want to create a locally regulated business in order to preserve flexibility.”

Leaving the single market means the end of free movement of people into the UK from other member states.

Hedge funds have expressed uncertainty over the status of existing EU staff and future recruitment of talent from within the EU.

The government has given little indication of what deal it is aiming for on immigration although Chancellor Philip Hammond has floated the idea of carving out financial services staff.

“There has never been a backlash against high-skilled immigration in the UK,” said Astleford. “If you are French or German then you may be a little bit worried about but that temporary concern will soon disappear."