The Irish funds industry is in great health in 2023, employing 50,000 people directly and contributing a billion euro to the Irish exchequer each year. From a standing start 35 years ago, there is now more than €4 trillion in assets under management (AUM) in Irish domiciled funds.
Audrey Crummy, deputy director of the Financial Services Ireland Group, Ibec, celebrates this success in 2023 pointing out the twin anniversaries of 30 years of the single market of the EU and also the 50-year anniversary since Ireland first joined the EU.
“Some of the big names in this space have been pretty much from the beginning such as State Street, Mediolanum and Citibank. Also, Northern Trust has been here since 1990 with Brown Brothers Harriman arriving in 1995,” says Crummy.
“The reasons for this early arrival of funds to Ireland are many. We have a great skills base and very close connectivity between our educational institutions and industry,” she says.
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Another great advantage is the time zone. Ireland sits neatly in the middle of the US, the EU and Asia. In addition, the presence of a very comprehensive double taxation treaty network around the world is very important to the funds industry – as well as other internationally focused businesses such as aircraft leasing. This gives Ireland a strong competitive edge over other locations.
Mark Jordan, chief strategy officer at Skillnet Ireland, looks at the macro and sees a major influx in investors gravitating into funds, mutual funds and other types of collective investments, which has driven the industry to grow. He sees much of that growth being attributable to the introduction of more stringent compliance and governance rules and regulations internationally which in turn has helped Ireland domestically.
“More stringent rules in the funds industry have improved consumer and investor confidence to get back into the market. Less regulated areas, such as packaged funds, collateral debt obligations, collateralised mortgage obligations and hedge funds, had given the industry a bad name.
“Offering more transparency and regulation on what had traditionally been opaque has improved confidence. Increased awareness of understanding risk, how a fund manager measures risk and understanding the composition of a fund, as well as greater insight into fees and expenses, has been a positive experience,” says Jordan.
As a result of the growth of the sector, the new employment opportunities have ballooned.
“When we engage with the administration funds sector, as well as the wider financial services as a whole, we’re seeing a lot more demand for skills and talent to be driven into the industry. We see many people pivoting out of technology wells into fund administration type roles.
“There are many roles offered here looking for skill sets in mathematics, computer sciences, and data type skill sets data management. The latter because a fund is a composition of lots of data points that give it its net asset value. This is very apparent in the growth of the major firms, especially in settling their back-office functions here in Ireland,” says Jordan.
Crummy also points out that this growth is not just restricted to Dublin and many of these large companies are very large regional employers with 40 per cent of the activity in funds and asset management outside the capital. The location of these international firms outside of Dublin has also led to increased popularity with people who want to preserve lifestyle choices as well as careers.
Feedback that Crummy has also received through Ibec is that Irish employees are very responsive, not only from a time zone perspective but also in a willingness to return to the office if an issue arises.
“The workforce is very respected for this positive response,” says Crummy.
Jordan points to the obvious but positive fact that Ireland is the only native English-speaking country in the EU and he also recognises the strength of the education system.
“There is a strong pipeline of graduates wanting to work in large financial institutions. When combined with the pro-business approach of the Government, this makes Ireland an attractive location for funds. Companies can also see the success of other multinationals thriving here and that breeds confidence too.
“I understand Ireland is probably the biggest market in Europe for assets under management for exchange traded funds, which again has shone a positive light for other companies thinking of doing business here,” says Jordan.
Going forward Jordan believes Ireland will be able to maintain its dominance and success in the funds industry.
“A key reason has been the swift action from the Irish Central Bank to adopt regulatory changes, both domestically and internationally, which has helped enable growth and confidence.”
Government focus continues to be a positive factor, and Crummy suggests that this sector is possibly the only industry to have a dedicated government function. Back in 2015 Ireland Financial Services (IFS) 2020 was launched by then minister of State at the Department of Finance Simon Harris in 2015 and it was extended and renamed “Ireland for Finance” by then minister Michael D’Arcy in 2019.
The vision of the strategy is for Ireland to be a top-tier global location of choice for specialist international financial services. Currently it is chaired by Minister of State Jennifer Carolyn McNeil, while Ibec holds the secretariat.
“This year, our focus is sustainable finance and digital finance,” says Crummy. “And in addition, the nature of industry means that there are some very interesting EU and global roles that are based in Ireland. This adds both to the strategic importance of the industry and also to the opportunity for people to claim exciting and fulfilling jobs in the sector.”
While other sectors have experienced recent job corrections, the funds industry continues to grow which bodes well for the industry going forward.