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irishfunds.ie

Irish Fund Industry Updates

irishfunds.ie

Growth in AuM of the Irish Funds Industry

2008 to June 2018

517 597 759 820

968 1,044

1,275 1,447

1,579

1,831 1,877

129 151

205 235

260 301

388

452

506

565 610

-

500

1,000

1,500

2,000

2,500

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q2 2018

Net A

ssets

in E

UR

bill

ion

s

UCITS AIFs

Source: Efama, September 2018

irishfunds.ie

Fund Growth Trends: Number of UCITS and AIFS

2008 to June 2018

1,928 1,906 1,844 1,984 2,138 2,254 2,272 2,337 2,419 2,566 2,679

3,097 2,721 2,899

3,085 3,167

3,345 3,561

3,864 4,051

4,266 4,342

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q2 2018

Num

ber

of F

und

s

AIFs UCITS

Source: Efama and Irish Funds September 2018

irishfunds.ie

Ireland is the fastest growing of the 5 largest European

fund domiciles 2012 – 30 June 2018 (2011 based 100)

Source: EFAMA Statistics September 2018

2012 2013 2014 2015 2016 2017 Q2 2018

Europe 113 123 142 158 178 196 198

Luxembourg 114 125 148 167 177 198 202

Ireland 116 127 157 180 198 227 236

France 109 110 114 121 129 139 137

Germany 113 124 140 153 166 180 182

UK 117 135 159 179 177 199 200

-

50

100

150

200

250

300

% G

row

th

irishfunds.ie

Ireland Voted Favourite Fund Domicile

71%

45% 45%

33%

27%23%

20%

14%

8% 6% 6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Ireland Germany Luxembourg United Kingdom Netherlands France Sweden Spain Italy Malta Other

Which European domiciles would fund managers choose if starting over?

•71% of 200 global asset managers would choose Ireland as one of their top-3 European domiciles.

•73% of managers ranked Ireland as a top-3 jurisdiction in terms of its legal and tax framework for investment funds.

•72% of managers ranked Ireland as a top-3 domicile as regards business conditions for domiciling funds.

•67% of respondents ranked Ireland as a top-3 domicile as regards regulatory conditions.

•76% of US managers rank Ireland as a top-3 domicile in terms of the best regulatory conditions for domiciling funds in Europe.

•The full survey report is available from http://www.matheson.com/eiu-report

irishfunds.ie

The Story of 2018 in the Irish Funds Industry

• Ireland is the second largest fund domicile in Europe at the end of June 2018.

• The Irish funds industry has grown strongly in 2018 so far.

• Ireland services more than 40% of hedge funds globally

2,4872,457

Total assets under administration

Irish funds EUR billion

Non-Irish funds EUR billion

Sources: Central Bank of Ireland, Irish Funds September 2018

98 85

136115

139

298

81

0

50

100

150

200

250

300

350

2012 2013 2014 2015 2016 2017 YTD2018

Net sales €bn – Total Domiciled Funds

Net sales - Total Irish Funds

irishfunds.ie

Irish Domiciled Funds - by Asset Class

28%

22%25%

19%

4% 2%

Equity

Bond

Alternatives

Money Market

Balanced

Other

Source: Irish Funds July 2018

irishfunds.ie

Irish Funds - by Promoter Origin

61%

26%

8%

2%1% 2%

North America

UK

EU-27

Switzerland

Asia

Other

Source: Monterey 30 June 2017

irishfunds.ie

ETFs in the Irish funds industry

56%

10%

9%

23%

2%

Net Assets of UCITS ETFs by Domicile

Ireland

France

Germany

Luxembourg

Other

Source: Irish Funds, June 2018

irishfunds.ie

European ETF Market by domicile

2008 to June 2018

8 12 18 18 20 17 17 4 5 11 1118 24 27 31 35 43 43

47 53 56 532635

42 32 37 40 42 65 7082

47

21

3448 43

47 47 49

8182

110 168

24

43

62 68

96129 137

222

281

355

375

0

100

200

300

400

500

600

700

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Ireland

Luxembourg

France

Germany

Others

Source: Efama September 2018, PwC Analysis

irishfunds.ie

Evolution of cross-border distributionNumber of cross-border funds and registrations

irishfunds.ie

Top 5 markets for the registration of

Irish UCITS

Ireland

Registrations inDecember

2017

December

2016% Growth

United Kingdom 2,764 2,447 12.95%

Germany 2,643 2,141 23.45%

France 2,336 1,992 17.27%

Switzerland2,003 1,689 18.59%

Netherlands1,879 1,710 9.88%

Top 5 Markets 11,625 9,979 16.49%

Total No. of Registrations 26,928 23,161 16.26%

Source: PwC and Lipper, December 2017

irishfunds.ie

Typical Fund Structures

irishfunds.ie

UCITS or AIF

irishfunds.ie

UCITS & AIF Regulation

• Harmonisation of retail investment product

across the EU

• Regulated product - Central Bank of Ireland

• Automatically authorised for sale to members of

public in other EU Member States

• Must comply with marketing and advertising

regulations applicable to local UCITS funds

established in those other MS (EU “passport”)

• Primarily sold to retail investors but increasingly

targeting institutional investors

• ETFs and MMFs are UCITS regulated funds

• Alternative Investment Fund Managers Directive

imposes harmonised conditions and

requirements on the operations of AIF managers

in return for an AIF “passport” to market AIFs

across the EU and manage AIFs domiciled in

other member states other than the AIFM home

state.

AIF/UCITS

Investment Company (plc)

Unit Trust CCF ICAV ILP

Most popular

Denotes AIF only

irishfunds.ie

Typical Structure:

Investment Company (PLC / ICAV)

Investment Company PLCs:

• Can be either a UCITS or AIF PLC. Regulated entities set up as PLCs pursuant to Companies

Act 2014 (Ireland Company Law). PLCs are often umbrella funds with multiple sub-funds

which combine to give company totals.

• Each sub-fund has its own portfolio of investments and investors. There is segregated liability

between sub-funds.

Management Company (Optional – investment

company can “self-manage”)

Investment Company

(Ireland)

Owns assets of fund and appoints service providers

(may be self-managed)

Transfer Agent (Ireland)

Maintains shareholder

records

Investors

(any location)

Distributors

(any location)

sells fund to investors

Investment Manager

(any location)

makes investment decisions

Auditor

(Ireland) examines records for regulatory

compliance

Administrator

(Ireland) Calculates fund

NAV and prepares reports

Custodian

(Ireland) Safekeeping of

fund assets

Global

Sub-custodian

(any location) Safekeeping of assets in other jurisdictions

irishfunds.ie

ICAV – Key features

• The ICAV is an Irish regulated fund established under the ICAV Act 2015.

• It is a corporate vehicle and has separate legal personality.

• The Central Bank is both the registration and the supervisory authority of the ICAV.

• The ICAV is a flexible vehicle – it can be open-ended, closed-ended, have limited liquidity, be a

UCITS or an AIF.

• The ICAV can be established as an umbrella fund with various sub-funds and share classes.

• The ICAV has flexibility in terms of accounting standards (Irish, UK, USA, IFRS, Japanese and

Canadian GAAP) and sub-fund year ends.

• The ICAV is administratively less burdensome - there is just one constitutional document -

Instrument of incorporation (IOI) and the ICAV can dispense with requirement to hold an AGM.

• The ICAV can be self-managed or managed by external Management Company.

• The ICAV has the ability to “check-the-box” for US tax purposes.

• The ICAV is eligible to take advantage of some of the Irish treaty network, including the U.S.

treaty.

• The ICAV has the ability to have a special carry class at ICAV level.

irishfunds.ie

Comparison of ICAV and PLC

Distinguishing features ICAV PLC

Ability to ‘check-the box’ for US taxation purposes O

Required to have the aim of spreading investment risk O

Shareholder approval required for all changes to constitutional

documentO

May dispense with requirement to hold annual general meetings O

Accounts can be drawn up at sub-fund level O

Requirement to have minimum of 2 directors

Filing with Companies Registrations Office O

Ability to have Umbrella structure and/or Stand-alone structure

UCITS / AIF compliant structure

irishfunds.ie

Hot Topics

irishfunds.ie

Hot Topics

• Brexit

• Regulation

• Talent

• General Data Protection Regulation (“GDPR”)

irishfunds.ie

PwC Brexit survey

What is your preferred jurisdiction to relocate UK functions to post Brexit?

38.9%

33.3%

8.3%

5.6%

5.6%

2.8%

2.8% 2.8% Ireland

Luxembourg

Netherlands

Germany

Malta

Italy

Slovakia

Not relocating

36 responses

irishfunds.ie

Brexit Structuring Options

DEFINITIONS:

• ‘MiFID Firm’ : Investment firms authorised under Markets in Financial Instruments Directive.

• ‘Super ManCo’ : authorised to provide services to UCITS and AIFs w/ the option of add-on authorisations for

segregated mandates

• ‘SMIC’ : Self-Managed Investment Company

MiFID Firm

Super ManCo w/ Add-on Authorisations (‘v2’)

Super ManCow/ Delegates

(‘v1)

SMIC

Global

Asset

Managers

Regional

Asset

Managers

Management

Models (‘Delegation’)

Moderator:

Panellists:

irishfunds.ie

Panel Discussion: Trends in

Fund Structures & Regulation

Michelle Lloyd, Maples & Calder

Clive Bellows, Northern Trust

Andy Finch, Canaccord

Maria Gabriela Bianchini, Optionality Group

irishfunds.ie

Distributing Alternative Investment

Funds: European National Private

Placement Regimes

irishfunds.ie

1. ICAV Distribution Potential: Parallel

Funds

irishfunds.ie

2. ICAV Distribution Potential: Global

Master-Feeder

irishfunds.ie

3. Limited Investment in Cayman SPC –

84.9%

ICAV

Cayman SPC

Assets

84.9%

100%

irishfunds.ie

4. Co-Investment Option

ICAV

Cayman SPC

Assets100%

84%

16%

irishfunds.ie

Armin Choksey, PwC

Comparisons of ICAV & Singapore VCC

irishfunds.ie

The Singapore Variable Capital StructureVCCs can be set up as a

stand-alone entity,or as an umbrella entity with

multiple sub-funds.

A legal entity form specificallyfor investment funds that can

be used for traditional and alternative strategies, both on an open-ended and closed-ended basis.

VCCs require a

Singapore based

licensed or

regulated fund manager,unless exemptedunder the regulations.

The capital of a VCC will

always be equal to itsnet assets, thereby providingflexibility in the distributionand reduction of capital.

Foreign corporate fund

structures can be inward re-domiciled to Singapore as a VCC.

VCCs could avail itself of theUS

“check-the-box” election.

Courtesy of PwC Asian

Investment Fund Centre

irishfunds.ie

Overall regulatory frameworkSingapore Variable Capital Company (VCC)

Courtesy of PwC Asian

Investment Fund Centre

irishfunds.ie

Comparing Fund Forms (1/5)

VCC legislationLegal framework

The Irish Collective Asset-management Vehicles Act

2015 (the “ICAV Act”)

NoAre directors independent to fund manager?

Not required by the law. Irish Funds voluntary corporate governance code requires a

minimum of 1 independent director

Shares, debenturesTypes of securities that can be issued Shares, debentures

1Number of required directors 2

Yes (minimum one)Fund Manager directors required? No

1 Director must be resident 2 Directors must be residentDirectors must be resident?

MAS/ACRARegulatory authority Central Bank of Ireland

Common lawJudicial system Common law

Comparison by PwC Asian Investment Fund Centre

IrelandSingapore

Restricted/ Exempt VCC ICAV set up as QIAIF

The comparative are performed on high –level and is not meant to be a legal or regulatory advice. Legal advise is recommended.

irishfunds.ie

Comparing Fund Forms (2/5)

IrelandSingapore

Restricted/ Exempt VCC ICAV set up as QIAIF

Yes- mall offerings/private placement (less than

50)/institutional investorsCan be exempt from regulation? No

Singapore onlyLocation of fund managerMust be based in EU, or

approved in equivalent non-EU countries.

N/AMinimum capital requirement

Minimum subscription is EUR 100,000. Self managed

funds minimum capital of EUR 300,000

NoInvestment risk spreading No

YesIs the fund regulated? Yes

N/ARegister of directors required? Yes

Comparison by PwC Asian Investment Fund Centre

The comparative are performed on high –level and is not meant to be a legal or regulatory advice. Legal advise is recommended.

irishfunds.ie

Comparing Fund Forms (3/5)

IrelandSingapore

Restricted/ Exempt VCC ICAV set up as QIAIF

NoCan FS be prepared at sub-fund level? Yes

SFRS, IFRS, US GAAPFinancial Statements GAAPIFRS, US GAAP, Irish

GAAP, Japanese GAAP and Canadian GAAP

NoAre Financial Statements publicly available? No

NoAre Shareholder lists publicly available? No

YesCheck-the-box election? Yes

YesRe-domiciliation allowed? Yes

NoCan be distributed to EU via AIFMD passport? Yes

YesCan be distributed to EU via private placement? Yes

84# of tax treaties in the jurisdiction 74

Comparison by PwC Asian Investment Fund Centre

The comparative are performed on high –level and is not meant to be a legal or regulatory advice. Legal advise is recommended.

irishfunds.ie

Comparing Fund Forms (4/5)

IrelandSingapore

Restricted/ Exempt VCC ICAV set up as QIAIF

YesCan the fund access the tax treaties? Depends on the country

YesListing ability? Yes

NoFund taxation Exempt

NoSubscription tax No

YesMaster-feeder available? Yes

??Timeline to market QIAIF – 24 hours

YesCross sub-funds investments Yes

As per NAVShare price As per constitutive document

Comparison by PwC Asian Investment Fund Centre

The comparative are performed on high –level and is not meant to be a legal or regulatory advice. Legal advise is recommended.

irishfunds.ie

Comparing Fund Forms (5/5)

IrelandSingapore

Restricted/ Exempt VCC ICAV set up as QIAIF

Not requiredAre shareholder meetings required? Can be dispensed

As per constitutive document

Distribution

As per constitutive document and subject to

minimum capital requirement

Fair valuedValuation principlesFair valued unless provided for differently in constitutive

document.

??VAT/GST?Exempt but can register for

VAT and make reclaims

YesAre local service providers required for Company Secretary?No - but registered office in

Ireland

YesAre local service providers required for Auditor? Yes

Yes - Potentially through tax incentives

Are local service providers required for Administrator? Yes

Yes - (PE/RE exempt)Are local service providers required for Custodian? Yes

Comparison by PwC Asian Investment Fund Centre

The comparative are performed on high –level and is not meant to be a legal or regulatory advice. Legal advise is recommended. Slides should be accompanied with narrative to enable comprehensive interpretation.

irishfunds.ie

Gerard Whitty, IDA

Brexit, Irish Economic and FDI

Update

Q3 Economic

Performance

&

Recent FDI

Investment

Announcements

Gerard Whitty, Director, ASEAN & Taiwan

IDA Ireland, Singapore Office

Ireland Economic

Performance & Forecasts

40

Irish economy the top performer in Europe

Fastest growing economy in the Eurozone for past 4 years

GDP +7.2% in 2017

Growth across all sectors in 2017

National and International forecasts expect strong growth to continue in 2018 and 2019

GDP up 2.7% in Q1 2018 year-on-year

Source: CSO Quarterly National Accounts, July 2018

41

GDP Forecasts (%) 2018 2019

European Commission 5.6 4.0

Department of Finance 5.6 4.0

Central Bank of Ireland 4.7 4.2

IMF 4.5 4.0

ESRI 4.7 3.9

OECD 4.0 2.9

1.3%

1.7%

2.1%

2.3%

2.4%

5.1%

7.6%

11.2%

15.2%

16.0%

0.0% 5.0% 10.0% 15.0% 20.0%

Real estate activities

Distribution, transport, hotels…

Public admin, education and…

Arts, entertainment and other…

Financial and insurance activities

Agriculture, forestry and fishing

Industry

Professional, admin and…

Construction

ICT

Broad based sectoral growth in 2017*

*Growth in Gross Value Added at constant basic prices 2016-17

7.2

3.0 2.9 2.4 2.3 2.2 2.2 1.7 1.7 1.5

0.01.02.03.04.05.06.07.08.0

GDP Growth 2017Constant Market Prices

Source: IMF, World Economic Outlook July 2018

Openness key to Ireland’s economic success

42

4%

6%

8%

8%

12%

25%

26%

Food

Medical Devices*

Financial Services & Insurance

Machinery & TransportEquipment

Business Services

Computer Services

Pharma & Chemicals

Composition of Total Exports 2016

*Miscellaneous manufactured articlesSource: CSO; IDA calculations

197.9

238.7260.3

2014 2015 2016

Total Exports (€bn)

Services Goods Total

IDA Client Exports (% of total)

67% 66% 66%2014 2015 2016

€66.4bn

€64.6bn

€30.3bn

€21.1bn

€21.4bn

€14.6bn

€10.1bn

Behind headline figures: Inflation and Competitiveness

43

Source: Eurostat, CSO, July 2018Chart shows HICP measure of inflation

+ Ireland consistently ranked amongst the top countries in the world to do business

+ Growing economy has not led to significant price increases: Inflation consistently below Euro area average, and supported by weak sterling since Brexit vote

+ Maintaining and improving competitiveness as the economy grows is a key government priority.

0.7%

2%

-1

0

1

2

3

2015M01 2016M01 2017M01 2018M01

Inflation (% change)

Ireland Euro Area

88

12

6

109

17

24

Forbes BestCountry in the

World to doBusiness 2018

GlobalEntrepreneurship

Index 2018

IMD WorldCompetitivenessYearbook 2018

EIU DemocracyIndex 2017

ReputationInstitute Country

Index 2017

EuropeanInnovationScoreboard

World BankDoing Business

2018

WEF GlobalCompetitiveness

Report 2017

Ireland's International Ranking

Ireland: “A” grade from all major credit rating agencies

Ratings Agency Long-Term Short- Term Outlook/TrendDate of Last

Change

Standards & Poor's A+ A-1 Stable Jun-15

Fitch Ratings A+ F1 Stable Dec-17

Moody's A2 P-1 Stable Sep-17

DBRS A (high) R-1 (middle) Stable Mar-16

R&I A a-1 Stable Jan-17

High levels of investor confidence in Irish Economy

Sovereign debt ratings upgraded

Irish bond yields are trading below 1% and in line with core European sovereign yields

44

Labour Market

45

Over 2.2 million people at work in Ireland

46

+ Strong employment growth: 2.23million people now at work in Ireland

+ Employment at its highest level since 2008

+ Broad based employment growth across all sectors, not just FDI

+ For every 10 jobs lost in recession, 9 have been replaced

+ IDA clients created 1 in every 4 additional jobs in Ireland since 2012

+ Unemployment rate 5.1% in July 2018 –lowest level since October 2007

+ Long term unemployment rate low at 2.1%

+ Ireland’s unemployment rate below EU (7%) and Eurozone (8.4%) average

Source: CSO, Department of Finance, Eurostat

3

8

12

16

18

23

23

24

25

27

36

43

48

53

0 20 40 60

Financial, insurance and…

Agriculture, forestry and…

Transportation and storage

Public administration and…

Other activities

Administrative and…

Information and…

Wholesale and retail trade

Human health and social…

Education

Professional, scientific…

Industry

Accommodation and…

Construction

Broad based Employment Growth across all Sectors (000s) Q1 2012 – Q1 2018

Total Employment Growth: 359,000

Irish labour costs mid range in Europe

+ Irish hourly labour costs are mid range in Europe; below the Eurozone average but slightly above the EU average.

+ Irish labour costs are 10th in the EU, below countries like the Germany, Belgium, Luxembourg, France and the Netherlands.

+ Wage growth remains subdued (2% annually)

Source: Eurostat 2017. Labour costs shown for business economy sectors

47

26.6

29.830.4

0.0 10.0 20.0 30.0 40.0 50.0

BulgariaRomaniaLithuania

LatviaHungary

PolandCroatia

Czech RepublicSlovakiaEstonia

MaltaPortugal

GreeceCyprus

SloveniaSpain

United KingdomEU 28

ItalyIreland

EurozoneFinland

NetherlandsAustria

GermanyFrance

LuxembourgSwedenBelgium

Denmark

Labour Costs (€ per hour)

Knowledge and Talent

Education system ranked in the top 10 in the world.98% participation rate in education amongst 18 year olds – Highest in Europe. 53% aged 30-34 have successfully completed third level studies (EU average 39%).Irish IT specialists best educated in EU; 82% have third level qualification (EU average 62%).Ireland has the fastest-growing tech worker population in Europe for 2017, with the expectation that impacts of the Brexit vote will see that figure grow further.*New International Baccalaureate School being established in Dublin.

The IMD Competitiveness Yearbook 2018 ranks Ireland globally as:1st for secondary school enrolment1st for flexibility and adaptability 3rd for high worker motivation5th for availability of skilled labour5th for attracting and retaining talent7th for financial skills8th for foreign highly skilled personnel

*Source: State of European Tech 2017

48

Foreign Direct Investment

Update

49

Investments in Ireland up 22% in first half of 2018

Key Announcements 2018

52

Why Ireland in a post-Brexit scenario?

Brexit further underlines the advantages of Ireland as a destination for FDI, which include:

53

EU Market Access

English language

Common law system

Track record in FDI attraction and existing base of FDI investors

Highly skilled multilingual workforce

Political and economic stability

Consistent public policy regarding FDI

Regulatory certainty

Representation in EU policy and regulatory fora

EU Trade Agreements

Proximity to and connections with the UK and London

Impact of FDI on Irish Economy

54

MNCs make significant contribution to Irish Economy

IDA clients

Account for 10.2% of total employment in Ireland

58% of employment is outside of Dublin

Spent €17.9bn in Irish Economy in 2016 on payroll and Irish sourced materials and services

Invest €5bn in capex annually, half outside of Dublin

Invest €1.6bn in-house R&D

Account for 66% of national exports and 80%* of Irish corporation tax receipts.

55*Source: Revenue, April 2018; figure for all MNCs

55

National Development Plan (2018-2027)

Budgetary framework for €116 billion investment in public infrastructure and capital works over a 10 year period.

10 strategic investment priorities including education, housing, roads, public transport and the environment.

Government Plan to increase carrying capacity of the economy

56

National Planning Framework

Core strategy to develop strong regions around key urban centres of scale.

Comprises 75 National Policy Objectives including urban and regional population targets.

International Tax Environment

57

12.5% Corporate Tax Budget 2018 reaffirmed that the 12.5 per cent tax rate is, and will remain, a core part of our offering.

U.S Tax ReformU.S. Business will always need to have operations in the EU, even after completion of the Tax Cuts and Jobs Act 2017. Our 12.5% tax rate will continue to be competitive in all likely outcomes and will offer certainty to international business.

Digital EconomyDigital taxation is a global issue that should be progressed on an international basis through the OECD, not through Europe.

CCCTBUnder the EU Treaties, for the European Council to move a policy area such as taxation from unanimity to qualified majority voting would require a unanimous decision. Ireland would not support this.

OECD BEPSIreland has committed to adopt OECD minimum standard measures to counteract Base Erosion and Profit Shifting as well as those set out under EU ATADs. The OECD has given Ireland its highest possible overall rating on transparency and exchange of information.

Apple State Aid Ireland profoundly disagrees with the European Commission assessment and has lodged an appeal with the European courts.

IDA Ireland, Your Partner On Your Investment Journey

58

Introductions to Peer CompaniesAccess to Government SystemIntroductions to Industry AssociationsCollaboration With 3rd Level Institutions

Design and Hosting of tailored Fact-Finding Site VisitsInformation Gathering, Analysis and EvaluationRFIs (Requests for Information)

IDA Funding Programmes & IncentivesPublic Relations & Media SupportEmployment Permits & VisasProperty Solutions

Awareness(Consideration)

Engagement(Short-listing)

Investor Evaluation(Comparing)

Decision(Validating) Implementation After-Care

Gerard WHITTY

DIRECTOR, ASEAN & TAIWAN

IDA IRELAND, SINGAPORE OFFICE

+65 6238 0774 / +65 9815 4521

GERARD.WHITTY@IDA.IE

To learn more log on to WWW.IDAIRELAND.COM

IDA IRELAND – DUBLIN HQ

+353 1 603 4000

idaireland@ida.ie