Irish funds market emerges as Brexit winner

Figures from Thomson Reuters Lipper on July 19 show that Ireland, whose capital Dublin is a fund management hub, remained the investment centre of choice for the second consecutive month, recording net flows of €17.1 billion, far exceeding its nearest challengers — Switzerland (€4.8 billion) and Germany (€900 million).

Ireland also attracted the most flows during May, pulling in €16 billion.

Jake Moeller, head of Lipper research for the UK and Ireland, told Financial News: “Ireland has struggled as a regional centre when you compare it against Luxembourg, investors have preferred to invest in Luxembourg funds.”

In April, Luxembourg had attracted net inflows of €5.9 billion, while Ireland suffered outflows of €1.1 billion.

Moeller added: “That situation has totally changed with the Brexit outcome, it’s a lot more attractive as a proposition and I suspect it’s a direct result of the outcome [of the vote]. For many people Ireland will be a good hub, it is affiliated with Britain, it is English-speaking and it is in the same timezone for pricing, which has always been a problem for [fund] platforms.”

The UK suffered net outflows during June of €270 million.

Asset manager M&G Investments said on June 28, in the aftermath of the vote, that it was weighing up expanding its operations in Dublin. Financial News reported on June 27 that asset managers predicted some UK-based jobs to move to Dublin and its fellow European fund management hub Luxembourg as a result of the vote.

By the end of March, the Irish funds industry was home to €1.83 trillion in international fund managers’ assets, carrying out back and middle office functions for many of them.

According to the Lipper statistics Ireland attracted €18.9 billion in flows into money-market funds, €1.9 billion into bond funds and €400 million into alternatives.

Concerns have been raised that the UK’s exit from the EU would result in the loss of passporting rights for funds domiciled in the country to be distributed freely across the single market without restrictions.

Moeller added: “Until it becomes clear as to how passporting would work it makes sense for clients to diversify where they can into Ireland. If there was any doubt as to what European investors would want to use, it’s clear they would prefer to use a domicile that remains in Europe.”

Pat Lardner, chief executive at Irish funds, the country’s investment trade body, said: “What we are trying to do is make sure that we provide a really good environment that allows [asset managers] to focus on building their cross-border business.

“We are a very credible place to do that. There’s an amount of uncertainty that will exist for some period into the future. We are therefore making sure that as long as that exists there’s a really good structure that allows people to execute whatever distribution strategy they have.

“We are going to see a reasonable amount of flows here.”

Ireland bucked the trend in June, with the European mutual fund industry as a whole suffering net outflows of €20.6 billion. Equity funds accounted for the majority of outflows at €19.2 billion.

The figures show that European investors led a flight to safety and diversification in the run-up to and aftermath of the UK’s referendum, as bonds funds and alternatives attracted net flows of €1 billion and €700 million respectively.

Overall, the European industry has attracted net inflows of €29.5 billion so far in 2016.

The best-selling asset managers during June were BlackRock, Credit Suisse and Aviva Investors with net sales of €5.67 billion, €3.69 billion and €2.94 billion, respectively.

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