Since the Irish Collective Asset Management Vehicle (ICAV) came into effect on 18 March 2015, more than 157 vehicles had been authorised by the Central Bank of Ireland (through March 2016), according to the latest statistics released by Irish Funds, the representative body for Ireland's cross-border investment funds industry. In total, these funds have more than EUR8.4bn in AUM and have attracted net positive inflows every single month.
This is a testament to Ireland's reputation as Europe's leading onshore alternative funds jurisdiction and is helping to further augment the number of Irish-domiciled funds.
"Ireland has a longstanding tradition as a fund servicing centre," says Donnacha O'Connor (pictured), Partner at Dillon Eustace, one of Ireland's leading law firms. "There are more than 50 fund administration firms here alone, from large banking groups to smaller firms, so a number of tiers exist to support fund managers of different sizes. Ireland has traditionally been a fund administration centre for all types of funds and has built a deep level of expertise."
Indeed, on the back of the ICAV's success, Ireland's funds industry grew 21 per cent through November 2015, over a 12-month period based on the net rise in assets within the Qualified Investor Alternative Investment Fund or `QIAIF'. Through March 2016, total assets within Irish QIAFs were approximately EUR363bn according to Irish Funds.
Commenting on the ICAV, O'Connor says that it has become the corporate fund structure of choice based on the above figures. "By comparison, the number of new Irish public limited companies (plcs), which was the ICAV's predecessor, is much lower so the ICAV has become the default corporate fund.
"The ICAV is a bespoke piece of funds legislation so general Irish Company Law doesn't apply. In addition, the ICAV is a corporate `check-the-box' entity, which is beneficial for those wishing to market to US taxable investors and umbrella ICAVs can prepare separate audited financial statements for individual sub-funds. From a marketing and tax point of view, the ICAV is an enhanced version of the Irish Plc."
Whilst UCITS still remains the predominant fund product in Ireland – there are just shy of 4,000 funds including sub-funds – the number of QIAIFs is rising as more and more alternative fund managers bring regulated funds to market. Through March 2016, there were 1,961 QIAIFs registered with the CBI (including sub-funds).
"The numbers of QIAIFs being established are definitely accelerating, especially for managers implementing mandates for small numbers of institutional investors or managers operating in the private equity and real estate space as UCITS funds cannot invest directly in those asset classes. The fact that real estate assets have yielded good opportunities in Ireland over the past number of years and that QIAIFs are very tax efficient has meant that there have been a significant numbers of new real estate QIAIFs in particular established," observes O'Connor, who adds:
"We are also starting to see more start-up hedge fund managers coming to market than was the case over the last few years. Those managers are looking at domiciling their funds in the EU rather than offshore because it gives them easier access to the EU internal markets for funds. That trend is slowly shifting, which is good news for Ireland. If you are a start-up manager, there are real marketing advantages to be had from a carefully considered fund structure domiciled in the right jurisdiction," concludes O'Connor.
