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Global fund distribution: the Irish solution

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Global fund distribution: the Irish solution

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Ireland’s practical regulatory approach, access to global financial markets and operational skills and expertise have made it a natural choice for many asset managers. However, domiciling funds in Ireland requires consideration in terms of infrastructure and substance.

 

Ireland has a well-established reputation as a fund-friendly domicile, with a pragmatic regulatory environment in which, benefitting from the passports available under UCITS and AIFMD rules, funds may be sold and marketed into the EU and beyond, and which provides support for managers seeking to expand their global distribution capabilities and range of available funds.

 

However, the ability for a fund manager to access those opportunities is not without complexities. As part of a continued review to ensure that funds are properly managed, the Central Bank of Ireland (CBI), has established more stringent requirements for governance, compliance and ‘supervisability’. To domicile a Management Company in Ireland, managers must demonstrate ‘substance’ in Ireland, for example by maintaining a presence in the country, with Designated Persons generally in residence, operational capabilities and independent directors and administration. The situation is similar in Luxembourg.

 

Navigating the benefits and tradeoffs

 

A 2018 survey from PWC* reported that 39% of European fund managers were looking to move their operations to Ireland. Direct application to the Central Bank of Ireland is one route to achieve this; another is for managers to contract a third party management company (ManCo) to leverage that infrastructure. Both have benefits, but there are tradeoffs.

  1. Direct application requires the fund manager to staff up and build infrastructure and operations in Ireland. While this approach retains control in-house, the tradeoff is that it can be time-consuming and costly and approval by the CBI is not guaranteed.
  2. Outsourcing ManCo activity and Designated Person responsibilities to a third party is a lower cost approach that can ensure regulatory compliance. However, the tradeoff here is that the governance and oversight of the fund becomes the responsibility of a third party with a potential loss of some control by the manager.

 

Retaining control – a ManCo with added transparency

 

For AMX, Ireland is also an obvious choice. We chose to establish operations in Cork in 2016, based on the ability to support a wide range of funds from Ireland and a commitment to long-term growth. For managers who want to focus their time on their investment strategies and trading decisions, AMX can provide a different distribution option.

 

AMX offers institutional investors and managers an efficient platform for the buying and selling of asset management services. It provides managers with access to infrastructure at scale, to help reduce the costs associated with fund structures. With nearly $9bn in AuM in Ireland, AMX aims to set a new benchmark for professional investment.

 

AMX also runs its own ‘Super ManCo’ and its own Designated Person activities in-house. This means that operational activity and governance obligations are managed in harmony.  AMX also fully owns the regulatory responsibility for the trading entities which can be onerous and burdensome for managers.

 

For managers looking to domicile funds in Ireland and gain access to the client jurisdictions this may bring, AMX provides an efficient and effective solution through the ability to leverage an established, specialist fund infrastructure, governance and oversight platform.

 

The funds are run and fully-governed by AMX on its platform and the manager is appointed to run the portfolio, retaining decision-making and critical middle office functions from execution and trade matching to confirmation. Managers retain full transparency into the underlying clients and the client relationships, but leverage AMX to take care of the client administration and reporting.

 

The benefits of this model may be significant:

  1. Efficient and cost-effective: With fund administration handled by AMX, you can take advantage of scale and the lower costs that come from building strong strategic relationships with key fund service providers shared across the platform.
  2. Robust governance and oversight: AMX funds are run with governance and oversight by independent directors in Ireland. Our commitment to overseeing administration and counterparties is deep, grounded in our ultimate accountability to the Irish regulators to meet regulatory reporting requirements and ensure appropriate fund governance.
  3. Simplicity: Our platform is designed to be easy for managers and investors to use. For managers, AMX takes responsibility for client and regulatory reporting, benefitting from the data advantage it has through operating the vehicles. Managers can use the AMX portal to publish new content and add further commentary to clients. In this way, clients are able to receive a level of consistency in reporting across managers and via one easy access point, whereas managers are able to concentrate on the relationship management element of client servicing.
  4. Flexibility: AMX has been designed to be multi-asset class and global in nature, allowing managers to leverage the platform across their product bases and client jurisdictions over time. Today, AMX supports a number of institutional investment fund structures, within Ireland, that are available to global client jurisdictions, such as the Common Contractual Fund (CCFs) and ICAV (Irish Collective Asset Management Vehicles). Over time, AMX will aim to extend the range of vehicle types on offer to satisfy client requirements.
  5. Opportunity for growth: AMX can help unleash opportunities within your current client focus areas or open up new avenues. Having been designed to meet the needs and desires of institutional clients, AMX creates a new client experience, whilst allowing the investor to direct managers for onboarding. Through the design of robust infrastructure and services provided, AMX can also help managers unlock new opportunities that were previously out of scope or constrained.

 

Going beyond the tangible: access to skill

 

In addition to the benefits noted above, platform users gain access to the people and insight of AMX. Our team of over 80 professionals brings expertise from the asset management, custody, technology, legal and consulting industries. Our on-site capabilities in Cork, Ireland are delivered by an experienced team and our model is powered by decades of knowledge about the needs of managers and investors. The appeal of AMX’s solution has gained traction: since inception in February 2017, assets under management have grown to $9 billion and 50+ clients are using 24 strategies spanning hedge funds, equity and fixed income.

 

Our continued growth aims to power yours, as our focus is on creating strategic partnerships with our clients. As you assess future European and global distribution options, we at AMX would welcome the chance to talk with you about how we can help you. AMX is designed to offer a better way to manage your funds and costs, better transparency and access to markets, investors and opportunity.

 

For more information, please contact Jon Lamb or Eoin Motherway.

 

*PWC: Asset Managers target Ireland as relocation location after Brexit, October 2018

 

Photo credit: Eoin Motherway


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