Understanding funds - hedging your bets

Sonia Howard, Tax Director featured in The Irish Times Special Report on the Irish Funds Industry.

Since the establishment of the IFSC in Dublin in 1987, Ireland has grown into a globally renowned funds centre, says Sonia. The Central Bank of Ireland (CBI) is the regulatory authority responsible for the authorisation and supervision of Irish fund vehicles, she says, and it has worked closely with the Irish funds industry to accommodate a range of tax-exempt investment products using a variety of structures.

Ireland has total assets under administration of about €4 trillion, with Irish-domiciled funds amounting to more than €2.2 trillion with over eight thousand funds, she says. Ireland is the domicile for 5.9 per cent of worldwide investment funds assets, making it the third largest global centre and the second largest in Europe.

Within that, from a regulatory perspective, there are essentially two main designations: Undertakings for the Collective Investment in Transferable Securities (UCITS) and Alternative Investment Funds (AIFs). UCITS are primarily for non-professional or “retail” investors and AIFs are any fund other than a UCIT.

UCITS are tightly regulated investment funds that can be marketed to all investor types, both retail and institutional in Ireland, across the EU and globally.

AIFs refer to all investment funds that are not covered by the EU Directive on UCITS and instead fall under the Alternative Investment Fund Manager Directive (AIFMD), says Sonia. “This includes hedge funds, funds of hedge funds, venture capital, private equity funds and real estate funds.”

The main category for AIFs in Ireland under the Central Bank of Ireland rules are Qualifying AIFs (QIAIFs).

QIAIFs offer the broadest flexibility in terms of liquidity options as they may be structured as open-ended, open-ended with limited liquidity, or closed-ended, she notes. “The RIAIF is a retail fund product with no minimum investment requirement. A RIAIF cannot avail of the automatic right to market across Europe under the AIFMD marketing passport but access to individual markets may, however, be granted on a case-by-case basis.”

Content adapted from The Irish Times.

Subscribe to receive the latest BDO News and Insights

Please fill out the following form to access the download.