The investment funds and asset management sector in Ireland has been very successful since its establishment 30 years ago.
According to data from Irish Funds, there are currently 8,693 funds based in the country with net assets totalling €3.9 trillion, up from €2.4 trillion in 2018[i].
Orla Philippon, CEO – JTC Global AIFM Solutions (Ireland) Limited, looks at why Ireland has become such a thriving funds hub.
The fundamentals for a strong funds industry are there
Ireland’s success as a leading European fund domicile was not an overnight phenomenon but has been years in the making. “Ireland is the third largest fund domicile in the world, and the second in Europe after Luxembourg. Its history of servicing funds stretches back almost forty years following the establishment of the International Financial Services Centre in 1987. This long-standing experience of servicing funds has helped the country turn itself into a major fund domicile,” commented Philippon.
So, what differentiates Ireland from some of its peers? Firstly, a well-established regulatory framework that is transparent providing certainty for product producers. Its deep pool of talent and high-calibre service providers – including fund administrators, custodians, accountants, lawyers and ManCos – is a compelling sell for prospective managers. “Equally, the ubiquity of English as a common language gives Ireland an edge with UK and US fund managers over continental European domiciles. In addition, Ireland’s working culture is much more aligned with US and UK clients than elsewhere,” continued Philippon.
A gateway to Europe
Domiciling in Ireland and being regulated under either UCITS or the Alternative Investment Fund Managers Directive (AIFMD) enables asset managers to distribute their fund products seamlessly to EU investors.
As managers, especially those in the US, look to diversify their investor base beyond North America, many are turning their attention to Europe.
Europe is a lucrative investor market, with the European Fund and Asset Management Association (EFAMA) estimating that fund assets in the region totals €19.8 trillion, a significant jump from €6.1 trillion in 2011. [ii]
“Ireland is also attractive from an AIFMD passporting perspective, because non-EU managers wanting to market their products in Europe can avail of the AIFMD marketing passport by appointing a third-party such as JTC Global AIFM Solutions in Ireland.” The ability to leverage the passport via a ManCo is one of the solution’s main selling points,” said Philippon.
Not only does appointing a ManCo save third-country managers from having to invest in physical infrastructure inside the EU when distributing funds across member states, but it can help them navigate the European rules.
For example, the EU’s Cross Border Distribution Regulation – introduced in 2021 – imposes prescriptive rules on asset managers conducting so-called ‘pre-marketing’ within the EU, and these provisions could catch some firms out. “The Cross Border Distribution Regulation has made marketing into the EU even more onerous for managers. However, a ManCo will take care of this, allowing managers to focus on delivering returns and attracting new mandates,” according to Philippon.
A market underpinned by product innovation and sensible regulation
Aside from its excellent service provider pedigree, Ireland is home to some innovative fund structures including the Investment Limited Partnership (ILP). The ILP is subject to AIFMD and is being used by private capital managers including those running private equity and real estate funds. Praised for being agile and flexible, the ILPs are also tax transparent, which has made them very popular among foreign institutional investors. “The Irish ecosystem is well equipped to service funds, including ILPs which are supported by JTC” said Philippon.
The appeal of Ireland is further cemented by the calibre of its regulator – the Central Bank of Ireland (CBI). “The CBI’s ability to offer a 24-hour approval process is a major advantage, and this is very fast compared to other global jurisdictions,” said Philippon.
JTC in Ireland can provide comprehensive solutions tailored to clients’ requirements, including AIFM services through JTC Global AIFM Solutions, fund administration, depositary, and corporate services from offices in Dublin and Enniscorthy.
For more information on JTC Global AIFM Solutions specifically, please visit the dedicated website here.