Financial Services Ireland

Irish ETFs top €1trn – Fund industry increasingly favours ETF investment

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Exchange traded funds in Ireland have topped €1 trillion for the first time, as a growing majority of providers look to establish themselves in the country.

Ireland-domiciled ETFs rose above €1 trillion in assets under management at the end of June, making up 68 per cent of the nearly €1.5 trillion European market, according to Morningstar data.

Luxembourg is the next largest domicile for ETFs at €295bn, while the rest of Europe has €186bn combined.

Ralph Williams, associate director at Broadridge, says: “The overall fund industry is currently seeing a secular trend toward greater ETF investment – a phenomenon that will benefit Ireland thanks to its solid footing in this space.”

Irish ETFs have grown 160 per cent since the end of 2018 compared with 34 per cent for other funds in the country, causing ETFs’ share of Ireland-domiciled assets to jump from 21 per cent to around a third, according to Broadridge data.

Mr Williams adds: “ETFs have seen breakneck growth rates compared to other fund types, suggesting that, in this space at least, the Celtic Tiger is roaring again.”

Gerard Crossan, wealth and asset management director for Europe, the Middle East, India and Africa at EY, says ETFs continue to grow organically across Europe and are winning significant market share from the mutual funds market.

“Ireland is a global centre of excellence for the wider, global asset management industry, and there is significant [ETF] activity within the region,” he says.

“Ireland is well placed to capture increasing inbound flows, in large part due to significant investment in ETF technology and talent by the Irish fund administrators.

“Ireland already has strong regulatory frameworks in place, and with clear government and industry support, we expect this market to continue its growth trajectory.”

Jose Garcia Zarate, associate director of passive strategies at Morningstar, says Ireland has always been a “powerhouse” as a fund domicile.

“It comes as no surprise that from the start of the development of the ETF industry many providers have chosen it as their domicile of choice,” he says.

Ireland benefits from a tax competitive advantage for ETFs offering exposure to US equities, due to a double taxation treaty.

This content was first published in Ignites Europe.

Gerard Crossan

FS Director, Assurance
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