Ireland expected to overtake UK and US as favoured fund domicile

Many custodians, fund administrators and market infrastructures are planning to expand their operations in the country to meet the growth of Irish-domiciled funds.

By Joe Parsons

Ireland is expected to overtake the UK and US as the second top fund domicile for asset managers within five years, according to new research from State Street.

Of 250 asset managers surveyed globally by the Boston-based global custodian, 62% of funds will be domiciled for distribution in Luxembourg within five years, followed by Ireland with 55%.

This compares to the 46% of funds that are domiciled in Luxembourg today, and 42% in Ireland.

Meanwhile 51% of asset managers plan to distribute their funds in the UK, up from 42% today, and 50% in the US, up from 46% today.

“As cross-border products are increasingly seen as the optimal path growth, asset managers are looking for domiciles with an established regulatory environment,” said David Suetens, head of State Street in Luxembourg.

“Locations such as Luxembourg and Ireland that can for meet regulatory obligations confidently and efficiently are seen as the natural choice by asset managers, allowing them to mitigate risk, achieve economies of scale and reach investors globally.”

The study shows how Ireland is set to become more popular with asset managers to launch domestic funds in the face of the UK’s looming exit from the EU.

To meet this trend, many custodians, fund administrators and market infrastructures are planning to expand their operations in the country. JP Morgan, Northern Trust, Apex and Clearstream have all announced plans to expand staff in Ireland.

In addition, the survey found 64% of asset managers are planning to launch cross-border products in the next five years.

“As cross-border strategies rapidly gain traction, asset managers will seek scale and efficiency in a cost-pressure environment by choosing domiciles where they can distribute across jurisdictions, structures and governance frameworks,” added Liz Nolan, chief executive officer, EMEA, State Street.

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