Saturday 24 February 2018

Cash into Irish-based funds on the rise again

Emmet Oliver

THE flow of money in to Irish-based funds has increased by 18pc to €414bn, reversing major outflows from Ireland which took place at the peak of the financial crisis.

Figures compiled by the Central Bank show between December 2008 and September 2009 assets under management at Irish-based funds hit €414.8bn. Most of the growth was recorded in the second and third quarters of 2009 as financial markets recovered.

About €14.5bn of the money was fresh capital coming into Irish-based funds, with the remainder coming from higher valuations as markets recovered ground lost in the financial crisis. The eurozone funds market continues to be dominated by Luxembourg with a 30pc share, followed by Germany with a 21pc share.

France is able to attract 18pc, compared to Ireland's 8pc. Hedge funds are a particularly strong area for the Irish funds industry.

Ireland is now attracting about 50pc of hedge fund investment available in the eurozone, with Luxembourg the next biggest country in this area. In value terms Irish hedge funds are attracting €38bn.

The Central Bank said it was difficult to analyse the kind of hedge funds basing themselves in Ireland.

"It is difficult to analyse how diverse hedge funds are due to their investment strategies, the use of complex investment products and short selling,'' said a Central Bank paper.

Hedge funds have attracted criticism throughout the financial crisis with many critics accusing them of spreading counter-party risk.

But their defenders claim they provide liquidity and help to expose overvalued companies and assets.

Irish Independent

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