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  • Andy Bissell

ETFs Illuminate the Irish Fund Market with Spectacular Performance

New findings from the 29th edition of Monterey Insight Ireland Fund Report, reveal the market shares of all service providers in Ireland’s funds industry.

Overall assets in Irish domiciled funds increased by 8.6% in US Dollar value, reaching a market size of US$4,052.9.bn as at 30th June 2023 (up from US$3,731.2bn in 2022.) This equates to €3,714.9bn from €3,568.9bn, an increase of 4.1% in Euro compared to 2022. During this period, the number of Irish funds and sub-funds has grown by 3.1% to 6,643 (from 6,443 in 2022). 


The total market share of Irish domiciled and serviced funds increased by 7.6% in US Dollars, reaching a market size of US$5,761.8bn. Allowing for FX rate fluctuations, this would have represented an increase of 3.9%, reaching €5,281.3bn in 2023 from €5085.1bn in 2022.The overall total number of funds and sub-funds serviced in Ireland increased by 3.0% and reached 11,715, up from 11,377 funds and sub-funds the previous year.


In 2023 Irish domiciled equity ETFs have surpassed money market products domiciled in Ireland for the first time. This is a significant shift in the flow of assets as money market products have been the most popular vehicle for a number of years. Equity ETFs are now the dominant product type with assets of US$766.4bn and 902 funds and sub-funds highlighting the continued growth of the ETF market in Ireland. Analysis shows that money market products have dropped behind ETFs to second place based on assets of US$731.3bn and traditional equity mutual funds ranked third with assets of US$669.0bn. Equity and fixed income ETFs have displayed the highest asset growth in assets of 22.5% and 23.7% respectively based on the analysis.

 

In combined market share, alternative investment products (mainly hedge funds) continue to hold the top spot with US$1,058.0bn. Equity funds follow in second place. Notably, private debt saw a 33.3% increase in value among assets over US$100 billion, while fixed income ETFs and equity ETFs grew by 23.7% and 22.5% respectively.

 

During the period, over 580 new Irish funds and sub-funds were launched, accounting for US$76.3bn. Overall, the inflow of new business for Irish and non-domiciled funds and sub-funds, came to US$124.8bn across over 940 funds.

 

Among the newly launched Irish funds, alternative investments led with 78 funds and sub-funds, totalling US$15.0bn in assets.  Broadening the scope to include domiciled, serviced and newly reported funds, equities funds topped the list with 174 funds and sub-funds and US$30.0bn in assets. 

 

BlackRock Financial Management retained its status as the largest promoter/initiator of Irish domiciled funds, with total net assets of US$1,013.7bn. They were followed by Vanguard Group with US$232.0bn, and PIMCO with US$181.5bn. In the combined ranking of both domiciled and non-domiciled funds, BlackRock Financial Management again maintained its lead with US$1,041.4bn in total net assets, while Vanguard Group secured second place with US$232.0bn, ahead of Goldman Sachs with US$224.1bn.

 

The top three positions for Management Company/AIFM remained consistent with the promoter/initiator ranking. However, for Irish-domiciled funds, Carne Global Fund Managers (Ireland) secured the third spot with US$184.8bn, surpassing PIMCO Global Advisors (Ireland). BlackRock Asset Management Ireland and Vanguard Group (Ireland) maintained the first and second positions respectively.

 

State Street has maintained its top position for administration services since 2013. Its custody business for combined domiciled and serviced funds has maintained an even longer standing lead, dating back to 2011.

 

Terri Dempsey, Country Head, Ireland at State Street, commented: "State Street is proud to maintain our position as the leading provider of fund administration and custody services in Ireland. Our continued success reflects the dedication of our exceptional team, whose collaborative efforts and unwavering commitment to excellence continue to set industry standards. We take pride in partnering with our clients as they navigate the complexities of cross-border investment fund businesses, leveraging innovative technologies and tailored solutions. The latest findings from Monterey Insight clearly reflect the resilience of our industry as well as its potential for advancement, and I am confident that with the wealth of talent we possess, State Street will continue to thrive and lead in this time of wider growth."

  

For fund administration services across both domiciled and serviced funds, State Street Fund Services (US$1,802.3bn) continues to lead. Northern Trust (US$606.7bn) maintained their second position, followed as last year by BNY Mellon (US$569.2bn) in third and JP Morgan in fourth position with US$449.7bn.

  

Among custodians of domiciled and serviced funds, State Street Custodial Services rank first, having the largest assets under custody with US$1,611.2bn.  The Bank of New York Mellon SA/NV, Dublin Branch secures the second position with US$609.9bn, closely followed by Northern Trust with US$608.2bn.

  

Regarding the transfer agents ranking of serviced funds, State Street Fund Services holds the first position with total net assets of US$1,768.4bn. They are followed by Northern Trust with US$607.7bn in second position and BNY Mellon (US$444.8bn) in third, ahead of JP Morgan.

 

 For both domiciled and serviced funds, among Ireland’s professional audit firms PwC maintains a longstanding lead in auditor’s rankings, for both number of serviced funds and assets, auditing a total of 2,564 funds with US$1,341.4bn in assets. They are followed by KPMG with 1,992 funds (US$1,017.0bn) and Deloitte in third position with 1,950 funds (US$1,327.8bn).

  

For Irish domiciled funds, PwC also lead in number of funds with 2,096 funds, followed by Deloitte in second place with 1,644 funds and KPMG are in third position with 1,443 funds and sub-funds.  Deloitte take the lead position in assets this year, with US$1,255.2bn. PwC are second with US$1,189.1bn followed by KPMG with US$881.4bn.


Mary Ruane, Leader, PwC Ireland Asset & Wealth Management Leader, said: “We are delighted that PwC continues to be the number one auditor to the asset and wealth management industry in Ireland.

Asset growth continues to be tough and competition for market share remains intense. The industry is facing unprecedented pricing and margin pressure and there’s a significant battle for assets under management. With higher interest rates relative to the last 20 years and subdued valuations, conditions are less than ideal. We believe that many managers are realising that they will have to take some serious actions to stay competitive and relevant.

But there are significant opportunities to be had for asset managers to reinvent their organisations. Technology, and particularly generative AI can deliver these alongside opportunities from climate action and environmental reporting. PwC’s recent global investor survey revealed that more than nine in ten global investors believe corporate reporting on sustainability performance contains unsupported claims. Corporate reporting therefore needs to continue to evolve so that it provides reliable, consistent and comparable information that investors – and other stakeholders – can rely on.

“Notwithstanding the global headwinds, Ireland continues to prove itself as a global centre of excellence for international funds. And with this proven track record and tech capabilities, we can become a global centre for ESG, supporting the funds industry with continued growth in a low carbon environment.”

 

Among legal firms, for Irish domiciled funds, Dillon Eustace reclaim the top position with 1,418 funds, in front of Matheson ranked second with 1,229 funds and Maples Group in third place with 1,011 funds. For the market share ranking by assets, Matheson continue to lead for Irish domiciled funds with US$1,003.9bn. William Fry maintain their second place with US$915.7bn ahead of Dillon Eustace.


Etain de Valera, Head of Asset Management and Investment Funds in Dillon Eustace commented: “Dillon Eustace is very pleased to be named again as the leading legal adviser to Irish domiciled funds.  We also act for the most promoters of Irish domiciled funds amongst law firms in Ireland. In addition to reflecting the expertise of our market-leading team, it confirms the trust, confidence, and loyalty our clients have in the quality of our services. The global funds industry has remained resilient despite the macroeconomic and geopolitical challenges facing all sectors. The growth in the number of Irish domiciled funds established by our clients and the market as a whole was reassuring against that backdrop.

In 2024, we expect to see continued growth in products with an ESG focus and ETFs and in particular look to build further on our dedicated ETF team’s recent success in being name ETF Law Firm of the Year 2023 and the ETF Stream Awards.   We also anticipate strong interest in the ELTIF and look forward to the opportunities that will bring to the Irish market generally. 

The Dillon Eustace Asset Management and Investment Funds Department is one of the largest practices in this area in Ireland giving us unrivalled resources and depth. Our team works across all product types from traditional UCITS, ETFs, money market funds and alternative UCITS, to the full spectrum of Alternative Investment Funds (AIFs) such as hedge, funds of funds, real estate, infrastructure, loan and private equity funds. We advise on product design, authorisation, migration, listing, marketing, negotiation of side letters as well as general legal, tax and regulatory compliance issues.”

 

 For the 11th consecutive year, Maples Group are first for the market share ranking of serviced funds. Maples Group continue to lead as the largest legal adviser by funds serviced in Ireland providing legal advice to 1,606 funds, followed in second place by Dillon Eustace with 1,496 funds and in third position by Matheson with 1,235 funds.

For the market share ranking of serviced funds by assets, Matheson lead with US$1,008.6bn. William Fry maintain their second place with US$915.7bn ahead of Dillon Eustace.


Adam Donoghue, Co-Head of the Irish Funds & Investment Management Group at Maples and Calder, the Maples Group’s law firm commented on the results:  "We are delighted that for the 11th consecutive year, Maples has been recognised by Monterey Insight as the leading legal adviser to funds serviced in Ireland. Our market-leading Irish funds and investment management practice advised over 1,600 funds in 2023. That included the full spectrum of Irish-domiciled structures, as well as a wide variety of products from other leading global fund domiciles which required service from our Irish teams. As a result of acting on that volume of product, we believe that we have a well-rounded exposure to cutting-edge product trends and innovative fund structures in the industry. This experience, in addition to having the largest specialist investment funds team in Ireland, enables us to support our global clients in the most efficient and effective way. Our mission is to be the best ranked funds practice not only in Ireland, but globally.

He added, "Looking at 2024, we anticipate that our work in the area of sustainable finance will continue to accelerate sharply in response to growing demand from asset managers and investors. Our engagement in Ireland is part of a wider global ESG initiative across all of our offices and business lines. Along with our fiduciary and fund services colleagues, we now offer a comprehensive Maples Group range of ESG services and we look forward to working on even more innovative ESG deals this year. Separately, we are very excited by the opportunities that the revamped ELTIF product will create, through offering private wealth and retail investors enhanced exposure to alternative asset classes. We expect the enhanced ELTIF regime to provide a steady stream of new launches for our Irish and Luxembourg funds practices in particular."


Karine Pacary, Managing Director at Monterey Insight commented: “We are pleased to reveal the new results of the Irish Fund Industry in our 29th edition of the Monterey Irish Fund Report 2023.

Ireland has been performing exceptionally well in the current European climate. During this period, the equity and fixed income ETFs experienced an impressive increase of 22.5% and 23.7% respectively, which was one of the key drivers of growth. Additionally, private debt, private equity/venture capital and property real estate products all enjoyed double-digit growth of assets in the same period. The Irish fund industry is undergoing a transformation with alternative funds taking an increasingly prominent role. This growth is made possible by the outstanding capability of the service providers. 

Ireland has again demonstrated its continued attraction for asset managers being recognised as a global fund centre.”

 

For more information, please contact:

Karine Pacary, Managing Director, Monterey Insight, Tel. +44 (0)845 625 3863

 

Notes to Editors

Monterey Insight is an independent fund research company that provides comprehensive statistical analysis of the Ireland, Luxembourg, Guernsey, Jersey and UK fund industries: the only complete reference of service providers for all funds serviced in these jurisdictions.

As at 30th June 2023, leading service providers for all funds serviced in Ireland (i.e. including non-domiciled funds under administration or custody in Ireland) were as follows:


Source: Monterey Insight Ireland Fund Report 2023.

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