Irish-administered funds expected to top €4.7tn by 2020

The level of funds under administration in Ireland could top $5 trillion (€4.7 trillion) by the end of the decade.

That would represent almost 15 per cent growth from the record €4.1 trillion level of assets administered in the State at the end of last year, split almost 50:50 between international funds that are domiciled in Ireland and those that are not, according to professional services firm PwC.

It comes as the State solidifies its position as a leading hub for back-office functions for hedge funds and funds that track equity and bond market indices.

The Irish funds industry, which employs about 14,000 people, services more than 40 per cent of hedge funds globally and more than half of all European exchange traded funds. PwC estimates that the industry globally will have $101.7 trillion of assets under management by 2020, notwithstanding geopolitical uncertainties.

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Growth capacity

“Despite global uncertainties, we remain confident about the industry’s growth capacity,” said Olwyn Alexander, leader in PwC Ireland’s asset and wealth management practice.

“However, the enduring low interest rate environment and expansive monetary policy [by central banks], together with shifts in global investment patterns to passive and alternatives where Ireland punches well above its weight, gives plenty of cause for optimism.”

While the impact of Brexit is unknown, investment managers who need access to the European Union may choose to locate certain functions, such as compliance, regulatory oversight, governance and risk management, in Ireland in order to secure Central Bank approval to set up management companies in the State and access EU investors under passporting rules.

Asset management

Last week, The Irish Times reported that US asset management giant Legg Mason planned to set up an asset management company in Ireland.

“For US, UK and Asian managers seeking to access EU markets, we anticipate some level of investment management activity locating in Ireland as well as products and assets under management growth,” said Ms Alexander.

Meanwhile, PwC’s annual global survey of chief executives in the asset and wealth management industry shows that two-thirds of leaders in the sector expect that technology will impact or reshape competition within five years, but only 10 per cent plan to strengthen digital capabilities over the next 12 months. That’s less than half the feedback across the broader global financial services sector.