The Irish funds industry has remained extremely strong and resilient throughout many challenges since it came into being 30 years ago. It employs 17,000 people directly and another 32,000 indirectly and contributes just under a billion euro to the Irish exchequer each year.
In fact there was only one year when there wasn’t growth within the industry and that was in 2008. “Understandable,” says Fionán Breathnach, country head at Simmons and Simmons, given the scale of the financial crash and ever since then there has been year-on-year growth.
“It’s an extremely important industry within the Irish economy, with 180 companies that directly employ people,” he says.
That employment goes right across Ireland, says Eve Finn, managing director of LGIM Europe, and while domestically important, “internationally the fact we have grown so strongly in even five years has really cemented Ireland as one of the core global funds centres in the world”.
The €914,000 million to the Irish exchequer represented a 9 per cent increase in just two years and statistics from the Central Bank look at how the industry has fared from December 2020 to end of November 2021. There was 19 per cent growth in the level of assets in Irish-domiciled funds, almost €4 trillion in Irish-domiciled funds throughout the pandemic and post-Brexit. "The industry continues to go from strength to strength and has proven itself to be resilient and a significant contributor to the Irish economy," even throughout Brexit and Covid, Breathnach says.
Accelerated growth
In fact, Brexit has accelerated growth, with a huge number of firms coming to Ireland to set up European Union-based operations because of it. But they are set up very much with growth in mind, Finn says. “The industry as a whole has grown significantly in terms of global asset management players who have set up bases here. Ireland was always seen as a strong funds centre in Europe, alongside Luxembourg, but actually it was a bigger benefactor of Brexit than Luxembourg. There’s a real opportunity to continue to be seen as an innovation centre now,” she adds.
“The asset-management sector has benefitted the most from Brexit. In broad terms, the Irish funds industry offers international asset managers a domicile and platform from which to sell investment funds from, throughout the EU and with the UKs departure from the EU Ireland is now the only common-law English-speaking country and gives UK asset managers the platform to continue to access the European asset markets,” Breathnach says.
“We very much see ourselves working in partnership with our UK-based clients. The City of London is going to continue as a strong global financial centre but what we can offer is not only being able to give them a funds domicile but also a location in which they can establish or expand an already existing operation on the ground here in Ireland. We also serve as a gateway for US managers to gain access to the European markets where previously they may have defaulted to the UK to establish the foothold in Europe,” he says.
A combination of factors have led to the industry’s success down through the years, but two key reasons – a robust regulatory framework and talent – are key. “The regulatory framework is extremely important to asset managers and we are increasingly seeing investors in funds require a strong and robust regulatory framework in order for them to be confident in the type of funds that they invest in. Add to this the hard-working and talented workforce – managers in the UK and US have a level of expectation with regards to service and they receive that here,” he adds.
Finn says the talent pool really attracted LGIM to Ireland as it is strong and broad. “We’ve hired about 40 people in the Dublin office, eight different nationalities and lots of expertise. Brexit has broadened the range of roles that are available for people. There is a real opportunity for the talent market now,” she says.
Covid pandemic
In terms of Covid and changes to work practices, Breathnach says they pretty much went from full time in the office to at home and that proved to work in terms of IT and communications and they could continue servicing clients with same level of service.
“The industry adapted phenomenally well in March 2020. There was a period of significant market volatility, and we had to adapt our way of working, core to the fact the industry weathered that initial storm really strongly. At that time it was about ensuring we were safeguarding our investor’s assets. While adapting to WFH, tech played a huge part in that and there was little or no impact in terms of output for our clients,” Finn says.
Now looming large on the agenda is the ESG piece. “This trend is a big one, and has been with us for a number of years. But there will be more regulatory focus on it, transparency for investors and making sure disclosures are appropriate to demonstrate your sustainable credentials will continue,” she says.
There is also a lot of competition for talent, and it’s about having the right culture, people and diversity and helping them to upskill, she says.
Overall, the industry has remained robust throughout the difficult years, it has been able to overcome challenges, so the track record, according to Breathnach and Finn, suggests it will continue to grow and the pipeline of work for 2022 would suggest that.