Ireland Tops Europe’s ETF League With €1.5trn Funds

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Ireland has cemented its place as Europe’s foremost location for exchange-traded funds, which passed a milestone €1trn mark last month.

According to data from Morningstar that was first published in the Financial Times, Irish-domiciled exchange-traded funds – financial products that track indices of stocks, bonds or commodities – had assets under management of $1.6trn (€1.5trn trillion) last month. As recently as March, the figure was below €1trn, according to the Central Bank.

That means close to 70pc of Europe’s ETF market is based in Ireland. The next-largest jurisdiction for ETFs is Luxembourg. ETFs now make up around one-sixth of the entire funds industry in Ireland.

“The ETF industry within our wider asset management industry is kind of the shining light,” said Lisa Kealy, ETF leader at consultants EY.

“The reputation of Ireland as a financial services hub continues to attract new players in. Something like 430 of the top financial services companies operate in Ireland and 17 of the top 20 global asset managers operate in Ireland. We’ve got a really strong, solid international financial services sector.”

The Irish ETF market grew largely as a result of a favourable tax treaty with the US, but took off after asset management giant BlackRock’s decision to domicile its iShares brand – Europe’s largest ETF provider – here.

French asset manager Amundi solidified its Irish-domiciled ETF line-up last year after regulators approved the duplication of Luxembourg-housed US equity ETFs in Ireland.

BNP Paribas Asset Management received regulatory approval from the Central Bank for its first Irish ETF last month.

ETFs are considered relatively safe investments, as they are highly liquid, move with the market and are well-regulated – in Europe under the so-called UCITS directive.

They mainly track broad indices such as the S&P, though some are industry-specific, whereas others are “active”, meaning investors pick their own stocks.

The market for environment-related ETFs – which currently make up about 20pc of the market – has shown signs recently that it is about to expand, Ms Kealy said.

Source : Independent