23 Feb 2011
Paul Farrell, who has just been appointed to head the Dublin investment funds group at Walkers, the international law firm, says that the UCITS regime is too far advanced for European Union regulators to begin reeling in the investment strategies fund managers can offer.
Farrell’s view will reassure alternative asset managers who have voiced fears that the UCITS III regime could become a victim of its own success. The view, which a number of hedge fund mangers have expressed in private, is that the European Union may severely curtail the use of UCITS wrappers by funds pursing alternative investment strategies. A growing number of UCITS funds with absolute return characteristics have attracted capital to managers at a time when many traditional investors, notably high net worth clients, have balked at re-allocating to hedge funds.
Walkers build out of its fund practice in Ireland means it can now service funds with a global platform that also includes funds services in Cayman, BVI and Jersey. Farrell expects a greater number of asset managers, particularly from North America, to use Ireland as an access point to the EU market.
Ireland’s Qualifying Investor Funds offering made headlines last year when Marshall Wace embraced it for the domicile of its main hedge funds. The domicile has also gained a wide number of money market and exchange traded funds, while Goldman Sachs and others have recently set up new managed account platforms there.
Farrell says Ireland offers a more timely service than Luxembourg where delays in the regulatory process have seen some approvals take six months or longer. He also cites a more proactive approach among service providers in Ireland.
“A lot of the concern stems from the implementation of the Alternative Investment Fund Managers Directive,” Farrell said. “What may happen is if there is a move by Brussels it will be to put additional requirements on service providers. I don’t think there is any turning back the clock on the UCITS regime. But more restrictions on service providers are possible but not on the funds or the strategies they may pursue.”
Farrell’s view will reassure alternative asset managers who have voiced fears that the UCITS III regime could become a victim of its own success. The view, which a number of hedge fund mangers have expressed in private, is that the European Union may severely curtail the use of UCITS wrappers by funds pursing alternative investment strategies. A growing number of UCITS funds with absolute return characteristics have attracted capital to managers at a time when many traditional investors, notably high net worth clients, have balked at re-allocating to hedge funds.
Walkers build out of its fund practice in Ireland means it can now service funds with a global platform that also includes funds services in Cayman, BVI and Jersey. Farrell expects a greater number of asset managers, particularly from North America, to use Ireland as an access point to the EU market.
Ireland’s Qualifying Investor Funds offering made headlines last year when Marshall Wace embraced it for the domicile of its main hedge funds. The domicile has also gained a wide number of money market and exchange traded funds, while Goldman Sachs and others have recently set up new managed account platforms there.
Farrell says Ireland offers a more timely service than Luxembourg where delays in the regulatory process have seen some approvals take six months or longer. He also cites a more proactive approach among service providers in Ireland.
"With the passing of the Directive, Walkers' Dublin office is well placed to act as the designated legal advisor responsible for ensuring investment managers' compliance with the Directive, which is one of the requirements of the authorisation process for non-EU managers," Farrell said. "We see demand for investment fund product under the Irish regulatory framework among our fund manager clients.”
