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Irish Fund Global Distribution

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Success of Irish Fund distribution at Global Level.

Success of Irish Fund distribution at Global Level.


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  • 1. Assurance Asset Management Review of the global distribution of Irish UCITS funds October 2009 First for business. First for people.
  • 2. Contents 1. Overview of the Irish UCITS market 1 2. Distribution is Key – The Irish UCITS Market! 3 3. Breakdown of the main asset classes for Irish UCITS by region 5 4. Irish UCITS – Equity funds 7 5. Irish UCITS – Bond funds 8 6. Irish UCITS – Money Market Funds 9 7. Irish UCITS – Exchange Traded Funds 10 8. Key domiciles where Irish UCITS funds are distributed 11 9. How PwC can help? 12 10. Contact details 13
  • 3. Overview of the Irish UCITS market 1. Overview of the Irish UCITS Growth of Irish UCITS 800 market UCITS funds are the ideal vehicle for promoters who wish to distribute their funds throughout the EU without 700 having to obtain authorisation from each Member State. 2007 The success of the UCITS structure has extended beyond the borders of the EU and the UCITS brand is 600 now recognised globally as a well regulated investment 2006 product. UCITS funds are distributed heavily in Asia, the Middle East and South America as well as in 2009 500 Europe. 2008 2005 Ireland is one of the major centres for domiciling cross border UCITS funds. According to the Irish 400 Euro millions Funds Industry Association (IFIA), Ireland is the fastest growing European and UCITS fund administration 2004 centre over the past five years. According to the Central 300 Bank of Ireland and the European Fund and Asset Management Association (EFAMA), Irish domiciled net Source: Irish Financial Regulator assets grew by 49% between 2004-2008; the European average for the same period was 15%. Irish domiciled funds: breakdown by type Why domicile your UCITS in Ireland? Other €73.246bn Did you know … 80% of Irish domiciled funds are UCITS with a Net Asset Value of EUR 542,559 million in over 3,000 funds including sub funds as of June 2009, according to the Irish Funds Industry Association (IFIA) Bond and the Irish Financial Regulator? €83.713bn Money 353 fund promoters from over 50 countries have market funds established Irish domiciled funds. If non-Irish domiciled €312.791bn funds are included, over 780 fund promoters use Ireland as a servicing centre for investment funds. The Equity list on the following page shows a number of fund €137.558bn promoters who have set up Irish UCITS funds. Hedge €25.841bn Source: Financial Regulator, March 2009 Page 1
  • 4. Overview of the Irish UCITS market Fund Promoters who have set up Irish UCITS funds Alternatives enter the UCITS space • AIG • GLG • Putnam The UCITS framework has become increasingly diverse • Allianz • Goldman Sachs • Russell of the last few years. Most investment strategies are now possible under the UCITS regime. In fact alternative • AXA • HSBC • SEI strategies may now be achieved within the UCITS regime • Barclays • Ignis • Skandia as outlined in the table below. Additionally, within the current climate an increasing number of hedge fund • Baring Asset • INVESCO • Thames River managers are looking to set up their funds under the Management UCITS regime. This is mainly due to the uncertainty • Janus • Vanguard • BNY Mellon surrounding the Alternative Investment Fund Managers • Legg Mason Directive. Many alternative fund managers see the UCITS • GAM framework as a more suitable route for regulating their • PIMCO *All these fund groups have over ten Irish UCITS funds which funds. distribute to over ten countries according to Lipper Hindsight as of July 2009. Hedge What is the country of origin of these Irish UCITS UCITS I UCITS III Funds promoters? South Africa, Switzerland, Australia & Germany 3% Long Equity/Bond     3% 3% 3% 3% Synthetic Equity/Bond    Italy 5% Ireland 5% Long/Short*    UK 41% Leverage**    Other Absolute    12% Return US 25% Rel Benchmark Return    Alpha    Source: Fitzrovia 2008/2009 * Shorting strategy obtained via synthetic shorting using derivatives Other countries includes: Belgium, Bermuda, British Virgin ** No absolute leverage limit for sophisticated UCITS using VAR, Islands, Czech Republic, Denmark, France, Hong Kong, Japan. leverage limit of 200% NAV applies for non-sophisticated UCITS Netherlands, Norway, Singapore, Spain and Sweden Page 2
  • 5. Distribution is Key – The Irish UCITS Market! 2. Distribution is Key – The Irish UCITS Market! Distribution is paramount to the success of the UCITS product. Irish domiciled funds are distributed in over 60 countries across Europe, the Americas, Asia and the Pacific, the Middle East and Africa. The chart below outlines the key markets in which Irish UCITS are distributed. Top markets for Irish UCITS funds EU Switzerland Singapore Chile Hong Kong Other Channel Islands Bahrain Countries Peru 0 20 40 60 80 100 % of fund groups Source: Lipper Hindsight, PwC analysis, July 2009 Other countries includes: Australia, Bahamas, Cyprus, Gibraltar, Isle of Man, Japan, Macau, Mauritius, Mexico, Panama, South Africa & the United Arab Emirates. Page 3
  • 6. Distribution is Key – The Irish UCITS Market! Our research focused on fund groups in Ireland where Breakdown of EU countries for Irish UCITS the number of countries which they distribute to is greater than 5. (58 fund groups match this criteria). All fund groups sell to one or more European countries i.e. UK 100%. As shown, the top markets for Irish UCITS funds Germany include countries in all main regions including Europe, France South America (Peru and Chile), Asia (Singapore and Netherlands Hong Kong) and the Middle East (Bahrain). The chart Austria below highlights the main markets by region. Spain Italy Sweden Luxembourg Norway Breakdown of Leading Markets for Irish UCITS Belguim Finland 100 Countries Denmark 80 0 20 40 60 80 100 % of fund groups 60 Source: Lipper Hindsight, PwC analysis, July 2009 Note: Other EU countries that Irish UCITS distribute to include: Czech Republic, Greece, Poland, Portugal, Slovakia & Slovenia. 40 % of fund groups 20 Netherlands Hong Kong Singapore Sweeden Germany Bahrain Austria France Taiwan Spain Chile Peru Italy UK 0 EU Asia/ME South America Source: Lipper Hindsight, PwC analysis, July 2009 Page 4
  • 7. Breakdown of the main asset classes for Irish UCITS per region 3. Breakdown of the main asset Types of assets are sold in Europe classes for Irish UCITS per region Our research here is focused on fund groups in Ireland where the number of countries to which they distribute Money market funds 15% to is greater than 5. Of the 58 fund groups matching this criteria, 43% sell Irish equity UCITS funds to European Other countries. The following charts give a percentage 5% Equity breakdown of the main assets classes for each of the 43% individual main regions to which Irish UCITS funds are distributed. Mixed assets Europe is the most popular region for Irish UCITS funds 12% with the greatest number of the 58 fund groups selling Irish UCITS funds into this region as might be expected. Asia is the next largest market for Irish UCITS funds, Bond followed by South America. The Middle East has a much 25% smaller number of the 58 fund groups selling Irish UCITS funds into its region in comparison to the aforementioned regions. As we can see from the charts, equity is the leading asset class for all the four main regions; Europe, Asia, the Source: Lipper Hindsight, PwC Analysis, July 2009 Middle East and South America. In the Middle East 50% of Irish UCITS funds sold into this region are equities. The percentage breakdown for the equity asset class in the other regions is as follows; South America (48%), Europe Types of assets sold into Asia (43%) and then Asia (37%). Bonds are the next most popular asset class in all the regions. 31% of Irish UCITS funds sold into Asia are bond funds. This is followed by 29% in South America Money market and 25% for both Europe and the Middle East. funds 17% The breakdown for the money market asset class is as follows; in both the Middle East and South America 19% Equity 37% of Irish UCITS funds sold into these regions are money Other 5% market funds. This is followed closely by 17% in Asia and 15% in Europe. Mixed assets 10% The mixed assets class breakdown for each region is as follows Europe (12%) and Asia (10%). This asset class only accounts for 4% in South America and no Irish Bond UCITS that sell into the Middle East are classified under 31% the mixed assets class. All other asset classes fall under the other category with the following breakdown; the Middle East (6%), Europe (5%), Asia (5%) and South America (0%). Source: Lipper Hindsight, PwC Analysis, July 2009 Page 5
  • 8. Breakdown of the main asset classes for Irish UCITS per region Types of Irish UCITS sold in the Middle East “Equity is the Money market leading asset class for all funds 19% Other 6% Equity the four main 50% regions; Europe, Bond 25% Asia, the Middle East and South Source: Lipper Hindsight, PwC Analysis, July 2009 America”. Types of Irish UCITS sold into South America Money market funds 19% Mixed assets 4% Equity 48% Bond 29% Source: Lipper Hindsight, PwC Analysis, July 2009 Page 6
  • 9. Irish UCITS – Equity funds 4. Irish UCITS – Equity funds Top markets for Irish equity funds outside the EU As mentioned before equity is the leading overall asset Switzerland class for Irish UCITS funds. The following charts show Singapore the main markets for these equity funds in each of the aforementioned regions. Other The main countries in the EU are listed in the chart below Chilie with the top five countries being; the UK, Germany, France, the Netherlands and Austria. Hong Kong The top markets for Irish equity UCITS funds in Asia Taiwan include; Singapore, Hong Kong, Taiwan and Macau. Bahrain It is also worth noting that Switzerland is also a significant market for equity funds, in fact it is the largest market for Macau these types of Irish UCITS funds outside of the EU. Countries Peru In the Middle East the main market for Irish equity UCITS funds is Bahrain. In South America, the top markets for these types of funds 0 5 10 15 20 25 30 35 are Chile and Peru. No of fund groups Source: Lipper Hindsight, PwC analysis, July 2009 Top markets for Irish equity funds in the EU Other includes: Australia, Bahamas, Cyprus, Gibraltar, Guernsey, Isle of Man, Japan, Jersey and South Africa UK Germany France Netherlands Austria Italy Luxembourg Spain Sweden Belgium Finland Countries Norway 0 10 20 30 40 50 No of fund groups Source: Lipper Hindsight, PwC Analysis, July 2009 Page 7
  • 10. Irish UCITS – Bond funds 5. Irish UCITS – Bond funds Top markets for Irish bond funds in the EU UK Bonds are the second most popular asset class for Germany Irish UCITS funds. These charts highlight which are the dominant countries in each of the main regions; Europe, France Asia, the South America and the Middle East. Austria The main countries in the EU are listed in the chart Spain opposite with the top five countries being; the UK, Italy Germany, France, Austria and Spain. It is worth noting that the top three countries are the same for the equity Luxembourg asset class as well. Finland Switzerland is also a big market for bond funds, also Norway Countries being the largest market for these types of Irish UCITS Belgium funds outside of the EU. Denmark Similar to the equity asset class again, in South America, the top markets for these types of funds are Chile and Peru. The same can be said for Asia, the top 0 5 10 15 20 25 30 markets for Irish bond UCITS funds in Asia include; Singapore, Hong Kong, Taiwan and Macau, similar to No of fund groups the equity class. Source: Lipper Hindsight, PwC analysis, July 2009 The most notable difference between the bond and Top markets for Irish bond funds outside the EU equity asset classes is that unlike equity funds, none of the Middle Eastern countries make it into our top Switzerland markets for bond funds. This is due to the fact that a smaller number of fund groups sell these types of Singapore funds into countries in this region in comparison to other countries mentioned in the chart opposite. The Other main countries in the Middle East for Irish UCITS bond funds are Bahrain and the United Arab Emirates and are Taiwan included in the ‘Other’ section. Hong Kong Chilie Macau Peru Countries 0 5 10 15 20 % of fund groups Source: Lipper Hindsight, PwC analysis, July 2009 Other includes: Australia, Bahrain, Gibraltar, Guernsey, Isle of Man, Japan, Jersey, Mexico, Panama, South Africa and the United Arab Emirates Page 8
  • 11. Irish UCITS – Money Market Funds 6. Irish UCITS – Money Market Where are Irish Money Market Funds sold? Funds Other UK Ireland is a leading domicile for money market funds with 12% 13% EUR 318bn in Irish domiciled money market funds as of Finland July 2009. The chart below shows the growth of these 3% types of funds over the last five years. Germany Sweeden 10% 4% Norway 4% Growth of Irish domiciled money market funds Netherlands France 4% 9% 350 Luxembourg 300 5% Spain 7% Italy 250 6% Chile Singapore 200 4% Austria Hong 7% 6% Kong 6% 150 AUM -EUR Bn Source: Lipper Hindsight, PwC analysis, July 2009 100 Other includes: Australia, Bahrain, Belgium, Denmark, Guernsey, 50 Japan, Macau, Peru, Switzerland and Taiwan 2004 2005 2006 2007 2008 2009 Top markets for Irish money market funds in the EU 0 UK Source: Irish Funds Industry Association (IFIA) Germany Irish UCITS funds which are classified as money market France funds are distributed to a variety of countries. In the EU the main markets are the UK, Germany, France, Spain Austria and Austria. The top three countries are the UK, Germany Italy and France similar to the bond and equity asset classes. Outside of Europe the main countries are Singapore, Hong Luxembourg Kong and Chile. Netherlands Sweden Countries Norway Finland 0 5 10 15 20 No of fund groups Source: Lipper Hindsight, PwC analysis, July 2009 Page 9
  • 12. Irish Ucits – Exchange Traded Funds 7. Irish UCITS – Exchange Traded According to our research the main markets for Irish UCITS ETFs are in the EU, the top four countries are the UK (16%), Funds Germany (16%), Italy (15%) and the Netherlands (13%). The main market outside of the EU is Switzerland with 9%. Ireland is the leading domicile for Exchange Traded Funds (ETFs) in Europe, with EUR 36bn in assets as of July 2009. 28% of European ETFs are domiciled here. Ireland is the leading European domicile for internationally distributed ETFs mainly due to the strong expertise which has been built up by all the various service providers in this area. Additionally, a number of Irish fund administrators have customised systems for servicing these types of funds. Ireland as a Domicile for ETF’S Where are Irish Exchange Traded Funds (ETFs) sold? Other 3% Austria 8% UK 16% Switzerland Ireland 28% 9% France Rest of the 10% Germany 16% world 72% Luxembourg 10% Italy 15% Netherlands 13% Source: Irish Funds industry Association (IFIA), July 2009 Source: Lipper Hindsight, PwC Analysis, July 2009 Other includes: Chile, Peru, Singapore and Sweden Page 10
  • 13. Key domiciles where Irish UCITS funds are distributed 8. Key domiciles where Irish UCITS funds are distributed Top 5 countries in the EU where each Irish UCITS asset class/product offering is distributed Rank Equities Bonds Money Market Funds Exchange Traded Funds 1. UK UK UK UK 2. Germany Germany Germany Germany 3. France/Netherlands France France Italy 4. Austria Austria/Spain Spain Netherlands 5. Italy Italy Austria/Italy Luxembourg Top 5 countries outside of the EU where each Irish UCITS asset class/product offering is distributed Rank Equities Bonds Money Market Funds Exchange Traded Funds 1. Switzerland Switzerland Singapore Switzerland 2. Singapore Singapore Hong Kong Singapore 3. Chile Taiwan Chile Chile 4. Hong Kong Hong Kong Bahrain/Switzerland Peru 5. Taiwan Chile Macau/Taiwan N/A Source: Lipper Hindsight, PwC Analysis, July 2009 Page 11
  • 14. How PwC can help? 9. How PwC can help? to develop, implement and maintain cross-border distribution strategies. Today, through our unique Global Fund Distribution (GFD) service, PwC remains the market leader of solutions for Audit Services cross-border fund distribution. Our service includes: Our audit approach is tailored to suit the size and nature of • Market Strategy your organisation and draws upon our extensive industry knowledge. In addition to the independent audit we offer • Market Entry advisory services in the areas of financial reporting, corporate • Market Reporting governance, regulatory compliance, independent controls and risk assessment. • ETF Listing Tax & Legal Services • Market Publication Our Tax and Legal Services formulates effective strategies for • Market Intelligence Monitor optimising taxes, implementing innovative tax planning and effectively maintaining compliance. • Distributor Analysis In recognition of the international tax issues to be considered • Distribution Model Optimisation in structuring funds, our specialised tax team works Advisory Services extensively with our global investment management teams on an ongoing basis. PwC also provides a full range of business advisory services for both large organisations and independent advisors Regulatory Advisory Services entering the investment fund business. Our business PwC has a dedicated regulatory and compliance service team advisory services team can assist clients in making strategic to assist you with all aspects of financial services regulation. assessments of the investment business, preparing business The regulatory and compliance services team provides plans and economic analyses as well as advising on the support and advice to help you identify, manage and control structure of both the investment advisor and the underlying any existing and future regulatory risks. Our services can be fund. The team can also offer advice on systems and broadly categorised under three main headings: operational needs, identifying and selecting outside vendors and preparation of full documentation of policies and • Market entry; feasibility studies, authorisation services, procedures. governance arrangements, compliance frameworks, capital adequacy arrangements & notification assistance Our Market Share Other 1% • Regulatory risk management Deloitte 4% • New regulatory obligations Global Fund Distribution Services E&Y 15% PwC has an integrated global network of local experts coordinated by a dedicated central team supporting all aspects of your cross-border fund distribution strategy. PwC 57% Designing, implementing and maintaining a multi-jurisdictional KPMG 23% distribution strategy involves a unique set of challenges. PwC can help with these challenges. We understand the interconnected processes and specific local and international resources required for a cross-border strategy to be sustainable. More than 10 years ago, PwC pioneered a revolutionary and unique service supporting fund promoters Source: Ireland Funds Encyclopaedia June 2009/2010 Page 12
  • 15. Contact details 10. Contact details Olwyn Alexander Vincent McMahon Tel: +353 1 792 8719 Tel: +353 1 792 6192 Email: olwyn.m.alexander@ie.pwc.com Email: vincent.macmahon@ie.pwc.com Pat Candon Declan Murphy Tel: +353 1 792 8538 Tel: +353 1 792 8770 Email: pat.candon@ie.pwc.com Email: declan.g.murphy@ie.pwc.com Fiona De Burca Damian Neylin Tel: +353 1 792 6786 Tel: +353 1 792 6551 Email: fiona.deburca@ie.pwc.com Email: damian.neylin@ie.pwc.com Patricia Johnston Jonathan O’Connell Tel: +353 1 792 8814 Tel: +353 1 792 8737 Email: patricia.x.johnston@ie.pwc.com Email: jonathan.oconnell@ie.pwc.com Joanne Kelly Marie O’Connor Tel: +353 1 792 6774 Tel: +353 1 792 6308 Email: joanne.p.kelly@ie.pwc.com Email: marie.o.connor@ie.pwc.com Andrea Kelly Ken Owens Tel: +353 1 792 8540 Tel: +353 1 792 8542 Email: andrea.kelly@ie.pwc.com Email: ken.owens@ie.pwc.com Page 13 Page 12
  • 16. Contact details Roshene Pickering Pat Wall Tel: +353 1 792 6815 Tel: +353 1 792 8602 Email: roshene.pickering@ie.pwc.com Email: pat.wall@ie.pwc.com Tony Weldon Pat Convery Tel: +353 1 792 6309 Tel: +353 1 792 8687 Email: tony.weldon@ie.pwc.com Email: pat.convery@ie.pwc.com Advisory John O’Leary Tel: +353 1 792 8659 Andy O’Callaghan Email: john.oleary@ie.pwc.com Tel: +353 1 792 6247 Email: andy.ocallaghan@ie.pwc.com Real Estate Robin Menzies Enda Faughnan Tel: +353 1 792 8553 Tel: +353 1 792 6359 Email: robin.menzies@ie.pwc.com Email: enda.faughnan@ie.pwc.com Tax & Legal Services Regulatory & Compliance Services Jim McDonnell Deirdre McManus Tel: +353 1 792 6836 Tel: +353 1 792 7356 Email: jim.mcdonnell@ie.pwc.com Email: deirdre.mcmanus@ie.pwc.com Page 14
  • 17. This publication has been prepared as a guide only. In the interests of brevity and clarity, detailed information may be omitted which may be directly relevant to an individual’s or an organisation’s circumstances. Professional advice should always be taken before acting on any information contained in this publication. Re-publication and dissemination (other than brief quotations with appropriate attribution) is expressly prohibited without prior written consent.
  • 18. pwc.com/ie © 2009 PricewaterhouseCoopers. All rights reserved. “PricewaterhouseCoopers” refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity PricewaterhouseCoopers, One Spencer Dock, North Wall Quay, Dublin 1 is authorised by the Institute of Chartered Accountants in Ireland to carry on investment business. Designed by PwC Design Studio 02031