| Irish funds industry breaking new ground |
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| The Irish Funds Industry Association’s Pat Lardner reviews the year to date for Irish funds, which has seen assets under administration grow to almost €3 trillion, the prospect of loan origination funds, AIFMD and the introduction of the ICAV. 'As we enter the home stretch in 2014, it continues to be a busy year for the Irish Funds Industry Association (IFIA), presenting both opportunities and challenges. This year has seen sustained growth in the industry with assets continuing to flow into Ireland. Ireland as a country now administers assets worth almost €3 trillion, representing an annualised growth rate of almost 19% up to the end of 2014,' he writes. |
As we enter the home stretch in 2014, it continues to be a busy year for the Irish Funds Industry Association (IFIA), presenting both opportunities and challenges. This year has seen sustained growth in the industry with assets continuing to flow into Ireland. Ireland as a country now administers assets worth almost €3 trillion, representing an annualised growth rate of almost 19% up to the end of 2014. The growth in assets has been mirrored by a growth of the fund industry’s position in Ireland which now employs over 13,000 people across 12 counties. | | Pat Lardner |
The Alternative Investment Fund Managers Directive (AIFMD) deadline passed on 22nd July this year and needless to say this complete regime overhaul under a new EU framework has been critical for the alternatives industry and Ireland’s positioning within it. With over 2,000 AIFs authorised in Ireland and more than 40% of global hedge fund assets serviced here, Ireland is well placed as the jurisdiction of choice for AIFMD-compliant funds and managers. As of 22nd July 2014 the total number of authorised and registered AIFMs in Ireland was 102 and Ireland serviced combined AIF assets worth over €1.5 trillion. AIFMs have now begun compiling and filing the detailed regulatory reporting required by AIFMD and Irish service providers are ideally placed to assist with this complex reporting and other valued-added activities. In a recent survey of Irish fund service providers, 83% of respondents confirmed that their firm was providing middle office and/or risk services to AIFMs, demonstrating how the industry is evolving and developing new capabilities and skillsets.
Advocacy is one of the pillars of the IFIA’s work and this year has been highly visible in representing the funds industry. The IFIA have worked closely with the government, the Central Bank of Ireland (CBI) and other stakeholders to ensure Ireland continues to have one of the most competitive regimes for funds in Europe. This includes a response to the CBI consultation on loan origination funds in which the proposals to establish a regulated loan fund framework in Ireland were welcomed. Loan origination by investment funds has grown in popularity in recent years in response to a funding gap created by restrictions on access to bank credit in the aftermath of the financial crisis. IFIA is looking forward to the launch of this new framework, which will operate under AIFMD. The new loan fund structure will be of particular benefit to SMEs that are too small to access the corporate bond market.
Another key initiative by the IFIA in 2014 has been the introduction of a new Corporate Governance Code designed for fund service providers. This code has been developed in consultation with CBI and will provide a set of principles and guidance especially in oversight, risk and compliance. The code will be introduced on a ‘comply or explain basis’ which allows fund service providers a degree of flexibility on how they meet the requirements included in the code. The IFIA has been working hard with the Irish government on the new Irish Collective Asset Management Vehicle (ICAV) which will offer managers new structuring and distribution possibilities. This means that certain company law rules more suited to ordinary trading companies than investment funds will not apply to the ICAV, thus reducing some of the administrative costs and increasing efficiencies in comparison with operating under the Companies Act.
Addressing the IFIA’s annual global funds conference, Taoiseach Enda Kenny said of the vehicle, ‘It will make Ireland’s regulated fund structures the most accessible, innovative and sophisticated in the EU’.
The IFIA has also increased its visibility to the global funds community by visiting more locations than ever before, this year alone clocking up nine events in the USA, five in the UK, four in Hong Kong, two in Switzerland, and others that include Germany, Japan and Australia. The 2014 annual conference was the largest held to date and offered a platform for growing indigenous companies to promote themselves to the funds industry. Also achieved this year was the re-opening of Chile to Irish domiciled funds, an important step in accessing Latin America. All of this work has been possible due to close liaison and cooperation with government, regulatory and industry bodies and the IDA in particular have been paramount in increasing inward investment to Ireland. Finally, the IFIA has assisted in the ongoing development of the Institute of Banking’s (IOB) Certified Investment Fund Directors programme which offers investment fund directors an academic programme to deal with the distinctive characteristics that investment funds have compared to other financial organisations.
Despite the many achievements of the IFIA in the past year, the current environment presents significant challenges, not least due to the scale and pace of regulatory change taking place, as well as the cost and competitive pressures faced by member firms. The UCITS V Directive will bring new depositary requirements amongst other changes to the EU’s longstanding UCITS framework for mutual funds. IFIA has been actively involved in an iterative process around UCITS V at EU level and will continue to engage on the drafting of the implementing measures. IFIA has also input to the debate on EU money market fund reform as a key priority in order to develop a set of rules which would be workable from an industry perspective. On the product side, IFIA looks forward to the launch of European Long Term Investment Funds (ELTIFs) in the near future, as an opportunity to promote sustainable long-term investment in the European economy.
2014 has been a busy year for IFIA as it continues to advocate, engage and represent members. The deadline for AIFMD has certainly put the spotlight on the alternative funds industry and shown how strong Ireland is in its servicing of the Alternative Investment Fund market. Further regulation will no doubt make 2015 just as busy, however the IFIA looks forward to the opportunities and challenges that this will bring in continuing to grow and develop Ireland’s funds industry. |
Pat Lardner is chief executive of the Irish Funds Industry Association.
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