Irish Fund Global Distribution

First for business. First for people.

Review of the global distribution of Irish UCITS funds October 2009

Assurance Asset Management

Contents 1. Overview of the Irish UCITS market 1

2. Distribution is Key – The Irish UCITS Market! 3

3. Breakdown of the main asset classes for Irish UCITS by region 5

4. Irish UCITS – Equity funds 7

5. Irish UCITS – Bond funds 8

6. Irish UCITS – Money Market Funds 9

7. Irish UCITS – Exchange Traded Funds 10

8. Key domiciles where Irish UCITS funds are distributed 11

9. How PwC can help? 12

10. Contact details 13

1. Overview of the Irish UCITSmarketUCITS funds are the ideal vehicle for promoters who wish to distribute their funds throughout the EU without having to obtain authorisation from each Member State. The success of the UCITS structure has extended beyond the borders of the EU and the UCITS brand is now recognised globally as a well regulated investment product. UCITS funds are distributed heavily in Asia, the Middle East and South America as well as in Europe.

Ireland is one of the major centres for domiciling cross border UCITS funds. According to the Irish Funds Industry Association (IFIA), Ireland is the fastest growing European and UCITS fund administration centre over the past fi ve years. According to the Central Bank of Ireland and the European Fund and Asset Management Association (EFAMA), Irish domiciled net assets grew by 49% between 2004-2008; the European average for the same period was 15%.

Why domicile your UCITS in Ireland? Did you know … 80% of Irish domiciled funds are UCITS with a Net Asset Value of EUR 542,559 million in over 3,000 funds including sub funds as of June 2009, according to the Irish Funds Industry Association (IFIA) and the Irish Financial Regulator?

353 fund promoters from over 50 countries have established Irish domiciled funds. If non-Irish domiciled funds are included, over 780 fund promoters use Ireland as a servicing centre for investment funds. The list on the following page shows a number of fund promoters who have set up Irish UCITS funds.

300

400

500

600

700

800

Growth of Irish UCITS

Eur

o m

illio

ns

2004

2005

2006

2007

2008

2009

Irish domiciled funds: breakdown by type

Bond€83.713bn

Equity€137.558bn

Money market funds €312.791bn

Hedge€25.841bn

Other€73.246bn

Source: Financial Regulator, March 2009

Overview of the Irish UCITS market

Page 1

Source: Irish Financial Regulator

Fund Promoters who have set up Irish UCITS funds

• AIG

• Allianz

• AXA

• Barclays

• Baring Asset Management

• BNY Mellon

• GAM

• GLG

• Goldman Sachs

• HSBC

• Ignis

• INVESCO

• Janus

• Legg Mason

• PIMCO

• Putnam

• Russell

• SEI

• Skandia

• Thames River

• Vanguard

*All these fund groups have over ten Irish UCITS funds which distribute to over ten countries according to Lipper Hindsight as of July 2009.

What is the country of origin of these Irish UCITS promoters?

Source: Fitzrovia 2008/2009

Other countries includes: Belgium, Bermuda, British Virgin Islands, Czech Republic, Denmark, France, Hong Kong, Japan. Netherlands, Norway, Singapore, Spain and Sweden

UK 41%

US 25%

Other 12%

Ireland 5%

Italy 5%

3%3%

3%3%

South Africa, Switzerland, Australia & Germany 3%

Alternatives enter the UCITS space The UCITS framework has become increasingly diverse of the last few years. Most investment strategies are now possible under the UCITS regime. In fact alternative strategies may now be achieved within the UCITS regime as outlined in the table below. Additionally, within the current climate an increasing number of hedge fund managers are looking to set up their funds under the UCITS regime. This is mainly due to the uncertainty surrounding the Alternative Investment Fund Managers Directive. Many alternative fund managers see the UCITS framework as a more suitable route for regulating their funds.

UCITS I UCITS IIIHedge Funds

Long Equity/Bond Synthetic Equity/Bond

Long/Short*

Leverage** Absolute Return Rel Benchmark Return

Alpha * Shorting strategy obtained via synthetic shorting using derivatives

** No absolute leverage limit for sophisticated UCITS using VAR, leverage limit of 200% NAV applies for non-sophisticated UCITS

Overview of the Irish UCITS market

Page 2

Top markets for Irish UCITS funds

Source: Lipper Hindsight, PwC analysis, July 2009

Other countries includes: Australia, Bahamas, Cyprus, Gibraltar, Isle of Man, Japan, Macau, Mauritius, Mexico, Panama, South Africa & the United Arab Emirates.

2. Distribution is Key – The Irish UCITS Market!Distribution is paramount to the success of the UCITS product. Irish domiciled funds are distributed in over 60 countries across Europe, the Americas, Asia and the Pacifi c, the Middle East and Africa. The chart below outlines the key markets in which Irish UCITS are distributed.

0 20 40 60 80 100

% of fund groups

Cou

ntrie

s

EU

Switzerland

Singapore

Chile

Hong Kong

Other

ChannelIslands

Peru

Bahrain

Distribution is Key – The Irish UCITS Market!

Page 3

Breakdown of Leading Markets for Irish UCITS

0

20

40

60

80

100

% o

f fun

d g

roup

s

EU Asia/ME South America

UK

Ger

man

y

Fran

ce

Net

herla

nds

Sp

ain

Sw

eed

en

Italy

Sin

gap

ore

Taiw

an

Hon

g K

ong

Bah

rain

Chi

le

Per

u

Aus

tria

Breakdown of EU countries for Irish UCITS


Note: Other EU countries that Irish UCITS distribute to include: Czech Republic, Greece, Poland, Portugal, Slovakia & Slovenia.

0 20 40 60 80 100

% of fund groups

Cou

ntrie

s

UK

Germany

France

Netherlands

Austria

Spain

Sweden

Luxembourg

Italy

Norway

Belguim

Finland

Denmark

Our research focused on fund groups in Ireland where the number of countries which they distribute to is greater than 5. (58 fund groups match this criteria). All fund groups sell to one or more European countries i.e. 100%. As shown, the top markets for Irish UCITS funds include countries in all main regions including Europe, South America (Peru and Chile), Asia (Singapore and Hong Kong) and the Middle East (Bahrain). The chart below highlights the main markets by region.

Distribution is Key – The Irish UCITS Market!

Page 4


3. Breakdown of the main asset classes for Irish UCITS per regionOur research here is focused on fund groups in Ireland where the number of countries to which they distribute to is greater than 5. Of the 58 fund groups matching this criteria, 43% sell Irish equity UCITS funds to European countries. The following charts give a percentage breakdown of the main assets classes for each of the individual main regions to which Irish UCITS funds are distributed.

Europe is the most popular region for Irish UCITS funds with the greatest number of the 58 fund groups selling Irish UCITS funds into this region as might be expected. Asia is the next largest market for Irish UCITS funds, followed by South America. The Middle East has a much smaller number of the 58 fund groups selling Irish UCITS funds into its region in comparison to the aforementioned regions.

As we can see from the charts, equity is the leading asset class for all the four main regions; Europe, Asia, the Middle East and South America. In the Middle East 50% of Irish UCITS funds sold into this region are equities. The percentage breakdown for the equity asset class in the other regions is as follows; South America (48%), Europe (43%) and then Asia (37%).

Bonds are the next most popular asset class in all the regions. 31% of Irish UCITS funds sold into Asia are bond funds. This is followed by 29% in South America and 25% for both Europe and the Middle East.

The breakdown for the money market asset class is as follows; in both the Middle East and South America 19% of Irish UCITS funds sold into these regions are money market funds. This is followed closely by 17% in Asia and 15% in Europe.

The mixed assets class breakdown for each region is as follows Europe (12%) and Asia (10%). This asset class only accounts for 4% in South America and no Irish UCITS that sell into the Middle East are classifi ed under the mixed assets class.

All other asset classes fall under the other category with the following breakdown; the Middle East (6%), Europe (5%), Asia (5%) and South America (0%).

Types of assets are sold in Europe

Equity43%

Bond25%

Mixed assets12%

Other 5%

Money market funds 15%

Source: Lipper Hindsight, PwC Analysis, July 2009

Types of assets sold into Asia

Equity37%

Bond31%

Mixed assets 10%

Other 5%



Breakdown of the main asset classes for Irish UCITS per region

Page 5

Types of Irish UCITS sold in the Middle East

Equity50%

Bond25%

Other 6%



Types of Irish UCITS sold into South America

Equity48%

Bond29%

Mixed assets 4%



“Equity is the leading asset class for all the four main regions; Europe, Asia, the Middle East and South America”.

Breakdown of the main asset classes for Irish UCITS per region

Page 6

4. Irish UCITS – Equity funds

As mentioned before equity is the leading overall asset class for Irish UCITS funds. The following charts show the main markets for these equity funds in each of the aforementioned regions.

The main countries in the EU are listed in the chart below with the top fi ve countries being; the UK, Germany, France, the Netherlands and Austria.

The top markets for Irish equity UCITS funds in Asia include; Singapore, Hong Kong, Taiwan and Macau.

It is also worth noting that Switzerland is also a signifi cant market for equity funds, in fact it is the largest market for these types of Irish UCITS funds outside of the EU.

In the Middle East the main market for Irish equity UCITS funds is Bahrain.

In South America, the top markets for these types of funds are Chile and Peru.

Top markets for Irish equity funds outside the EU

0 5 10 15 20 25 30 35

No of fund groups

Cou

ntrie

s

Switzerland

Singapore

Other

Chilie

Hong Kong

Taiwan

Macau

Bahrain

Peru


Other includes: Australia, Bahamas, Cyprus, Gibraltar, Guernsey, Isle of Man, Japan, Jersey and South Africa


Top markets for Irish equity funds in the EU

0 10 20 30 40 50

No of fund groups

Cou

ntrie

s

UK

Germany

France

Netherlands

Austria

Italy

Spain

Luxembourg

Sweden

Belgium

Finland

Norway

Irish UCITS – Equity funds

Page 7

5. Irish UCITS – Bond funds

Bonds are the second most popular asset class for Irish UCITS funds. These charts highlight which are the dominant countries in each of the main regions; Europe, Asia, the South America and the Middle East.

The main countries in the EU are listed in the chart opposite with the top fi ve countries being; the UK, Germany, France, Austria and Spain. It is worth noting that the top three countries are the same for the equity asset class as well.

Switzerland is also a big market for bond funds, also being the largest market for these types of Irish UCITS funds outside of the EU.

Similar to the equity asset class again, in South America, the top markets for these types of funds are Chile and Peru. The same can be said for Asia, the top markets for Irish bond UCITS funds in Asia include; Singapore, Hong Kong, Taiwan and Macau, similar to the equity class.

The most notable difference between the bond and equity asset classes is that unlike equity funds, none of the Middle Eastern countries make it into our top markets for bond funds. This is due to the fact that a smaller number of fund groups sell these types of funds into countries in this region in comparison to other countries mentioned in the chart opposite. The main countries in the Middle East for Irish UCITS bond funds are Bahrain and the United Arab Emirates and are included in the ‘Other’ section.

0 5 10 15 20

% of fund groups

Cou

ntrie

s

Top markets for Irish bond funds outside the EU


Other includes: Australia, Bahrain, Gibraltar, Guernsey, Isle of Man, Japan, Jersey, Mexico, Panama, South Africa and the United Arab Emirates

Switzerland

Singapore

Other

Hong Kong

Taiwan

Macau

Peru

Chilie

Top markets for Irish bond funds in the EU

0 5 10 15 20 25 30

No of fund groups

Cou

ntrie

s

UK

Germany

France

Austria

Italy

Spain

Luxembourg

Finland

Norway

Belgium

Denmark

Irish UCITS – Bond funds

Page 8


6. Irish UCITS – Money Market FundsIreland is a leading domicile for money market funds with EUR 318bn in Irish domiciled money market funds as of July 2009. The chart below shows the growth of these types of funds over the last fi ve years.

Irish UCITS funds which are classifi ed as money market funds are distributed to a variety of countries. In the EU the main markets are the UK, Germany, France, Spain and Austria. The top three countries are the UK, Germany and France similar to the bond and equity asset classes. Outside of Europe the main countries are Singapore, Hong Kong and Chile.

Where are Irish Money Market Funds sold?

France 9%

Singapore 7%

Chile4%

Luxembourg5%

Norway 4%

Other 12%

UK 13%

Germany 10%

Spain 7%

HongKong 6%

Austria 6%

Italy6%

Netherlands4%

Sweeden 4%

Finland3%


Other includes: Australia, Bahrain, Belgium, Denmark, Guernsey, Japan, Macau, Peru, Switzerland and Taiwan

Top markets for Irish money market funds in the EU

0 5 10 15 20

No of fund groups

Cou

ntrie

s

UK

Germany

France

Austria

Italy

Netherlands

Luxembourg

Sweden

Norway

Finland

0

50

100

150

200

250

300

350

Source: Irish Funds Industry Association (IFIA)

Growth of Irish domiciled money market funds

2004

2005

2006

2007

2008

2009

AU

M -

EU

R B

nIrish UCITS – Money Market Funds

Page 9 Source: Lipper Hindsight, PwC analysis, July 2009

Irish Ucits – Exchange Traded Funds

Page 10

7. Irish UCITS – Exchange Traded Funds

Ireland is the leading domicile for Exchange Traded Funds (ETFs) in Europe, with EUR 36bn in assets as of July 2009. 28% of European ETFs are domiciled here. Ireland is the leading European domicile for internationally distributed ETFs mainly due to the strong expertise which has been built up by all the various service providers in this area. Additionally, a number of Irish fund administrators have customised systems for servicing these types of funds.

According to our research the main markets for Irish UCITS ETFs are in the EU, the top four countries are the UK (16%), Germany (16%), Italy (15%) and the Netherlands (13%). The main market outside of the EU is Switzerland with 9%.

Where are Irish Exchange Traded Funds (ETFs) sold?


Other includes: Chile, Peru, Singapore and Sweden

UK 16%

Italy15%

Netherlands13%

Luxembourg10%

France10%

Switzerland9%

Austria8%

Other 3%

Ireland as a Domicile for ETF’S

Source: Irish Funds industry Association (IFIA), July 2009

Ireland 28%

Germany 16%Rest of the world 72%

8. Key domiciles where Irish UCITS funds are distributed

Top 5 countries in the EU where each Irish UCITS asset class/product offering is distributed

Rank Equities Bonds Money Market Funds Exchange Traded Funds

1. UK UK UK UK

2. Germany Germany Germany Germany

3. France/Netherlands France France Italy

4. Austria Austria/Spain Spain Netherlands

5. Italy Italy Austria/Italy Luxembourg

Top 5 countries outside of the EU where each Irish UCITS asset class/product offering is distributed

Rank Equities Bonds Money Market Funds Exchange Traded Funds

1. Switzerland Switzerland Singapore Switzerland

2. Singapore Singapore Hong Kong Singapore

3. Chile Taiwan Chile Chile

4. Hong Kong Hong Kong Bahrain/Switzerland Peru

5. Taiwan Chile Macau/Taiwan N/A

Key domiciles where Irish UCITS funds are distributed

Page 11


9. How PwC can help?

Audit Services

Our audit approach is tailored to suit the size and nature of your organisation and draws upon our extensive industry knowledge. In addition to the independent audit we offer advisory services in the areas of fi nancial reporting, corporate governance, regulatory compliance, independent controls and risk assessment.

Tax & Legal Services

Our Tax and Legal Services formulates effective strategies for optimising taxes, implementing innovative tax planning and effectively maintaining compliance.

In recognition of the international tax issues to be considered in structuring funds, our specialised tax team works extensively with our global investment management teams on an ongoing basis.

Regulatory Advisory Services

PwC has a dedicated regulatory and compliance service team to assist you with all aspects of fi nancial services regulation. The regulatory and compliance services team provides support and advice to help you identify, manage and control any existing and future regulatory risks. Our services can be broadly categorised under three main headings:

• Market entry; feasibility studies, authorisation services, governance arrangements, compliance frameworks, capital adequacy arrangements & notifi cation assistance

• Regulatory risk management

• New regulatory obligations

Global Fund Distribution Services

PwC has an integrated global network of local experts coordinated by a dedicated central team supporting all aspects of your cross-border fund distribution strategy.

Designing, implementing and maintaining a multi-jurisdictional distribution strategy involves a unique set of challenges. PwC can help with these challenges. We understand the interconnected processes and specifi c local and international resources required for a cross-border strategy to be sustainable. More than 10 years ago, PwC pioneered a revolutionary and unique service supporting fund promoters

to develop, implement and maintain cross-border distribution strategies. Today, through our unique Global Fund Distribution (GFD) service, PwC remains the market leader of solutions for cross-border fund distribution. Our service includes:

• Market Strategy

• Market Entry

• Market Reporting

• ETF Listing

• Market Publication

• Market Intelligence Monitor

• Distributor Analysis

• Distribution Model Optimisation

Advisory Services

PwC also provides a full range of business advisory services for both large organisations and independent advisors entering the investment fund business. Our business advisory services team can assist clients in making strategic assessments of the investment business, preparing business plans and economic analyses as well as advising on the structure of both the investment advisor and the underlying fund. The team can also offer advice on systems and operational needs, identifying and selecting outside vendors and preparation of full documentation of policies and procedures.

How PwC can help?

Source: Ireland Funds Encyclopaedia June 2009/2010

Our Market Share

PwC 57%

KPMG 23%

E&Y 15%

Deloitte 4% Other 1%

Page 12

Olwyn AlexanderTel: +353 1 792 8719Email: [email protected]

Pat CandonTel: +353 1 792 8538Email: [email protected]

Fiona De BurcaTel: +353 1 792 6786Email: fi [email protected]

Patricia JohnstonTel: +353 1 792 8814Email: [email protected]

Joanne KellyTel: +353 1 792 6774Email: [email protected]

Andrea KellyTel: +353 1 792 8540Email: [email protected]

Vincent McMahonTel: +353 1 792 6192Email: [email protected]

Declan MurphyTel: +353 1 792 8770Email: [email protected]

Damian NeylinTel: +353 1 792 6551Email: [email protected]

Jonathan O’ConnellTel: +353 1 792 8737Email: [email protected]

Marie O’ConnorTel: +353 1 792 6308Email: [email protected]

Ken Owens Tel: +353 1 792 8542 Email: [email protected]

10. Contact details

Page 12

Contact details

Page 13

Roshene PickeringTel: +353 1 792 6815Email: [email protected]

Tony WeldonTel: +353 1 792 6309Email: [email protected]

Advisory

Andy O’CallaghanTel: +353 1 792 6247Email: [email protected]

Robin MenziesTel: +353 1 792 8553Email: [email protected]

Tax & Legal Services

Jim McDonnellTel: +353 1 792 6836Email: [email protected]

Pat WallTel: +353 1 792 8602Email: [email protected]

Pat ConveryTel: +353 1 792 8687Email: [email protected]

John O’LearyTel: +353 1 792 8659Email: [email protected]

Real Estate

Enda FaughnanTel: +353 1 792 6359Email: [email protected]

Regulatory & Compliance Services

Deirdre McManusTel: +353 1 792 7356Email: [email protected]

Contact details

Page 14

This publication has been prepared as a guide only. In the interests of brevity and clarity, detailed information may be omitted which may be directly relevant to an individual’s or an organisation’s circumstances. Professional advice should always be taken before acting on any information contained in this publication. Re-publication and dissemination (other than brief quotations with appropriate attribution) is expressly prohibited without prior written consent.

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Irish Fund Global Distribution