Funds Europe – CP86 obviously centred on fund management companies. To what extent has it hit the third-party ManCo industry, because ManCos have to be appropriately resourced? For example, will there be challenges in attracting talent?
Callaly – Amundi entered the third-party ManCo market in Ireland last year and one of the main motivations was that we knew this increased focus on resourcing from the Central Bank was coming. We’d already managed to capitalise on a similar initiative in Luxembourg. Yes, I think you’re right, it has resulted in increased business for all the third-party ManCos that are appropriately resourced to take that business on.
Meehan – The industry has probably done quite well over the last 15 years cross-training people into other roles to a point that fund administration people may fit well within certain designated functions such as capital and financial management, and someone perhaps senior in a shareholder services team could potentially fit well in a distribution designated-person role.
Callaly – I agree. My impression is the DP role is increasingly being seen as an almost professional designation. It’s something a person is approved to do, perhaps within a particular area of expertise. In fact, Irish funds are setting up a specific DP forum across all of the different DP designations, so I think that’s going to increase the level of professionalism even further.
The industry has got so much experience and talent available to it that we’ve certainly had no challenges filling DP roles. But there are increasingly more senior opportunities for DPs and so some could move perhaps for money as opposed to for the right role. That could pose a challenge, but generally I think this is all developing in the right way.
McEvoy – Just to speak for ourselves, we’ve hired about 50 people so far this year for funds, be it on the fund administration, AIFM, and depositary side. It gives us great comfort that we can do that and do that successfully. For our part there’s a regional element, and I know obviously a number of our peers would have a regional element in terms of not just operating in Dublin. We have our centre of excellence in Cork and I think we see many, not just in terms of service provider administration but also AIFM providers as well, operating outside of Dublin.
Funds Europe – Looking ahead, which areas of development do you consider to be of principal focus for the Irish fund servicing industry in the next two to three years?
Kealy – Probably technology. There’s a big opportunity for us to build on technology and data in order to improve efficiencies and operating models in asset management.
Also, although we have a good tool set with the Icav, the CCF and the ILP fund structures, we probably need to also look at digital assets and active ETF structures. For me, it is about expanding products to develop a cutting-edge product range so investors see Ireland as a domicile of choice.
McEvoy – There are already new ILP fund launches in the market and I’ll be keen to see this increase, but I also think there is the opportunity for Ireland to be a European leader in ESG funds.
I think we also have an opportunity to modernise our 1907 partnership structure. This is used in traditional investment structures or partnership-type structures, but to be used as an AIF more widely, it does require some minor tweaks and I think that would be great to see. For example, any repayment of capital on a 1907 partnership leaves the LP exposed to, or liable for, that capital repaid until the completion of the partnership. So, what you tend to see is those partnerships are funded by debt. There are some technicalities like this that, if fixed, would allow the product to be used much more widely in the context of private asset funds.
Callaly – The data challenge associated with ESG – namely the SFDR Level II and the taxonomy – are underappreciated at this stage regarding some of the deadlines that have been pushed out. We’re right in the throes of that project and it’s going to be a massive, massive challenge for the industry over the next two or three years, particularly for smaller, less resourced players who I think are going to have significant challenges sourcing and maintaining the data.
Meehan – One more area to add is probably the Central Bank questionnaire released at the end of March, which has a large focus on costs and fees at the fund level. It is similar to the UK’s Assessment of Value regime, which was a large piece of work for ManCos in providing the necessary data. I expect that to be a real focus in Ireland, too.
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