THE NUMBER of new investment funds and sub-funds taking out a new listing on the Irish Stock Exchange (ISE) dropped to 104 in the six months to June, less than half the level in the previous six months and in the same period last year.

The listings figures for the first half of 2009 are down from 216 new listings in the July-December period last year and 213 new listings in the first six months of 2008. The drop reflects tough market conditions, liquidity problems and a decline in the availability of investor flows, the ISE said. The number of new funds listing this year is well down from highs seen in 2007, when there were 628 new listings, and 2006, when there were 567 new listings.

The listing business has been a lucrative one in recent years for ISE, whose operating profit was hit last year by the decline in new listings and in the issuance of specialist debt securities.

While some industry research points to possible recovery in new listings in the fourth quarter this year, others indicate early 2010 as the turning point. “Our experience in attracting listings from funds which launch is similar to previous time periods and we are confident of being able to add value to fund launches once the global market picks up,” the ISE said.

Meanwhile, a large number of funds and sub-funds are delisting from the exchange.

According to the ISE, 499 funds and sub-funds delisted in the first six months of the year. This amounts to a delisting rate of 13 per cent of the base, marginally down from the 14 per cent delisting rate in the second half of 2008 when 571 funds delisted.

Historically, the ISE said about 9 per cent of funds and sub-funds delist in a typical six-month period. Delistings peaked in January 2009 at 159 funds and sub-funds, compared with 34 delistings in January 2008.

However, the ISE said current trends suggest a reversion to levels seen prior to early 2008 and before. In June a total of 68 funds and sub-funds delisted, compared with 86 delistings in June 2008.

The ISE said the number of delistings was in line with global trends in the alternative funds industry, referring to industry research which points to a 30 per cent drop to $1.5 trillion in assets under management at the end of 2008. Estimates for 2009 point to a further 20 per cent decline.

Research findings suggest the reasons for the decrease are split relatively equally between negative performance and asset outflows. Negative performance is not necessarily the cause of asset outflow, research suggests, as funds that perform well are readily hit with investor demand for liquid assets given the reduced liquidity within the market.

“As cost pressures and performance demands increase on smaller funds we are likely to see this consolidation trend continue but at a slower pace,” the ISE said.

“In the latter half of 2008 (quarter 4) and early 2009 (most particularly January ’09) we saw a much higher level of funds delisting due to withdrawal of investor funds and assets outflows – again this outflow is commensurate with industry experience of the time.”