Britain’s exit from the European Union could spark a flurry of activity among continental fund managers keen to establish a foothold in the UK.

Many non-UK asset managers are considering opening offices in Britain for the first time as a result of Brexit, according to fresh industry research.

Around one in three in the sector believe Brexit will lead to an increase in merger and acquisition activity, with almost a quarter expecting more European-based operators to open offices in Britain.

However, the survey by financial services giant State Street found institutional and alternative investors continue to believe the UK’s decision to leave the EU is “fairly negative... for the UK fund management industry”.

Nevertheless, it found “there is still strong appetite for companies to maintain and grow their presence in the UK”.

Britain’s investment trust structures - funds listed on the stock exchange - continue to prove popular, with almost half (44pc) of foreign fund managers looking to expand operations using such vehicles, according to the State Street analysis.

Consultancy KPMG has previously warned Brexit could result in “the single biggest impact on cross-border financial services in a generation”.

Most asset management business conducted across borders in Europe uses three different regulatory passports: the Undertaking in Collective Investment in Transferable Securities (UCITS) directive, the Alternative Investment Fund Managers Directive (AIFMD) and the revised Markets in Financial Instruments Directive (MiFID II) passport.

In its research in June, KPMG found that “the passports work differently in all three directives and their loss would have different impacts in the retail and professional marketplaces”.

But Brian Allis of State Street said: “Our research suggests that, despite the headwinds and complexity that Brexit is causing, the UK is still a hub for a tremendous amount of investment management expertise, and an attractive centre for fund management activity in Europe.

“It is reassuring to see that, however negative the outlook for the UK fund industry may be right now, investors still want to maintain and grow their presence locally.”