Gary Palmer, chief executive, Irish Funds Industry Association
Palmer is seeing an increasing demand from investors for regulated hedge fund products and believes Ireland is well placed to meet that demand. He points to Ireland’s “particular expertise” in Ucits-compliant and qualifying investor funds as well as its activity in administering alternative funds.
“We have the distribution reach required for the investment management community,” he says.
At the IFIA, Palmer has been leading a “multilateral approach” to the EU’s alternative investment fund managers (AIFM) directive to ensure that the industry’s concerns are addressed. Moving forward, he sees innovation as key to Ireland’s future. “The reason why people would look to a jurisdiction like Ireland is only if there are product solutions, distribution opportunities or product efficiencies,” he notes.
Tara O’Reilly, partner, William Fry
O’Reilly believes the move into Ucits funds by hedge fund managers is an opportunity, giving access to a new range of potential clients. “I think it’s interesting that we’re not just seeing this from bigger hedge fund managers; we’re also seeing it from the smaller players. It will fill a gap for them. I think it will have a place in various asset allocation strategies,” says O’Reilly.
She acknowledges that asset flows to Ucits funds are slow at present and believes that investor education will be key to increasing this. “I think one of the concerns is that you’re not going to achieve the same returns,” she notes.
O’Reilly believes the move into Ucits funds and other regulated products is an effect of the lack of movement on EU legislation. “I think for a while managers were holding back on doing anything. What we’re seeing now is managers just deciding to do something,” she says.
Peter O’Dwyer, director, Trinity Fund Administration
O’Dwyer thinks the fund administration industry in Ireland is experiencing consolidation. “The consolidation of the industry has been predicted almost since it started but it’s definitely a feature now,” he observes. He says activity is increasing and administrators are recruiting new staff. O’Dwyer thinks the fund industry has been well supported by the authorities, pointing to the new redomiciliation legislation as evidence of this support.
“The fact that you can take a company from outside Ireland and put it into Ireland and it’s the same company is very beneficial,” he says. O’Dwyer adds that the fund industry has been “incredibly robust” through the financial crisis. Like other administrators, he reports that Trinity has a “very full pipeline at the moment”.
Ken Owens, partner, PricewaterhouseCoopers
Owens believes business has picked up considerably in the past six months, although the level of activity within the fund sector is not yet back to where it was before the financial crisis. Although Owens is seeing interest in Ucits structures from managers, he says: “Our message is that it doesn’t have to be Ucits, it can be another type of regulated fund.”
He believes that the trend is a good one for Ireland. “I think there being a move to regulation and a move away from less regulation has to be a positive for a regulated jurisdiction,” Owens points out. He says clients used the financial crisis as an opportunity to talk to auditors about their fees. The resulting decreases are unlikely to be reversed soon, Owens says.
Padraig Kenny, managing director, RBC Dexia
“The convergence story between the long funds that have been administered here in Ireland for the last 20 years and alternative funds has accelerated very sharply over the last six to 12 months driven by regulations,” says Kenny. He thinks the Irish fund industry is stable and well supported by the government and authorities. From a fund administrator’s perspective he says the task is to ensure that the correct operating models are in place to service both existing and incoming business. “Ireland has positioned itself on both the regulated and non-regulated side of the fund proposition,” Kenny believes, adding that businesses with global operating models will thrive in the post-crisis world of hedge funds.
Brian McDermott, partner, A&L Goodbody
“We’ve seen a very noticeable up-tick in activity in all types of product,” says McDermott of industry activity in the past few months. He notes that hedge fund managers are asking lawyers for advice on a range of issues, including fund launches and redomiciling existing funds to Ireland.
McDermott says the arrival of new law firms into Ireland is a vote of confidence in the jurisdiction. “These firms perceive that there must be greater potential for the domicile,” he says. However he thinks that the firms will have to work hard to make the move pay off. “It’ll be a challenge for any firm coming in because they’re dealing with a relatively mature legal services practice,” says McDermott.
Dermot Butler, chair, Custom House Group
“There appears to be a lot of bullish sentiment around,” says Butler of the fund industry in Ireland. However he is wary of the long-term prospects for Ucits-compliant funds and worries that many will struggle to find investors. “I think that there could be difficulty in finding a good-quality distributor,” he says. Butler adds that new hedge fund launches generally are struggling to raise capital, and says the industry had not “realised how difficult it would be for those start-ups to raise money”. He thinks that there will be a greater demand for managed accounts, providing more work for fund administrators as investors seek continued transparency and liquidity from their hedge fund investments.
The week on Risk.net, May 12-18, 2018Receive this by email