Question 1: Irish funds figures surpass €4 trillion
Aggregate NAVs of Irish domiciled funds breached the €4 trillion mark at the end of 2021 for the first time (€4.067 bn) (+ 22% on December 2021’s total of 3.324bn). (See table below) before falling slightly back in early 2022 (€3,909 bn in February), while the number of Irish-domiciled funds reached 8,372 in February 2022 (February 2021: 8,043).
EFAMA data for the same period are showing that the slight reductions in the first 2 months are concentrated in the UCITS funds area rather than AIFs, indicating the decline in overall equity market values in the early part of the year.
What comments would you make on the stellar year for the Irish funds industry last year, given these figures and what are your hopes for the rest of 2022?
References: EFAMA INVESTMENT FUND INDUSTRY FACT SHEET
Question 2: ETFs
Innovation remains strong in ETFs sphere as can be seen in areas such as personalised direct indexing or the increasing numbers of thematic ETFs based on everything from an executive’s ‘character’ to the ‘Metaverse’.
What significant ETF product innovations, or areas of product innovation, could you see in 2022-23?
Question 3: Crypto Assets, and Crypto currencies
The Central Bank of Ireland has given its first approvals to Irish-domiciled investment funds to invest, albeit indirectly, in crypto assets. The approvals followed warnings from the CBI, in concert with the ECB and other eurosystem central banks, about the risks of investing in crypto assets, notably crypto currencies. What do you see as main potential risks and opportunities crypto assets pose in the regulated funds space, and do you think there is a need for a clear delineation between cryptocurrencies and a wider universe of ‘digital assets’?
Question 4: Ireland’s ETF regime
IOSCO's recently released 'Good Practices for Consideration' consultation paper which contains proposed updates to IOSCO’s 2013 ETF Principles.
(See the paper at: https://www.iosco.org/library/pubdocs/pdf/IOSCOPD701.pdf )
The suggested measures focus on product structuring, disclosure, liquidity provision and volatility control mechanisms. Given that any new measures are very likely to strongly influence EU and Irish regulation in the area what are your thoughts on the proposals and any possible implications for Ireland’s ETF regime?
Question 5: Ukraine & Sanctions, and the fallout for investment funds
With Russia now down to a third of its stock of precision munitions, and constrained by the sanctions on production of replacements, its ability to sustain the destructive war waged in the East of Ukraine is increasingly limited. Meanwhile, the managed float of the ruble also seems increasingly difficult in light especially of likely western resolve to pursue fossil fuel sanctions, giving hope that the protracted war may stall further as the year goes on.
What longer term lessons are might likely be drawn by asset managers in relation to the war? Would you like to comment on this or any other aspects that have become apparent to you and your team?
Note: see the article written by Aoife Coppinger, Head of regulatory Affairs at Irish Funds in the April edition of Finance Dublin:
Examples of impacts of the war : ESG – and its recognition of sanctions; ‘doux commerce’, and long term realignments of supply chains globally, and doing business with entities companies in sanctioned nations.
Question 6: Share classes in ETFs
The potential for asset managers to create an ETF structure with listed and unlisted share classes could appeal to multiple investor types and allow leveraging of scale of an existing pool of assets. Do you see an appetite from asset managers for this type of structure? From an Irish/EU perspective what obstacles would need to be overcome to enable this type of structure to be established?
Question 7: Tokenised Assets and custody
The total market capitalisation of digital token has been forecast to reach over EUR 918 billion in 2026 (about half of the forecast EUR 1,820 billion of digital assets – : for more see - fuelling the surge in demand for custodial services for tokenised assets. What are the major considerations for a custodian and an asset manager in relation to custody of tokenised assets?
One ‘Wildcard’ Questions of your Choice.
These can be substituted for any of the above, as individual questions that you may wish to pose, and address.