Three fund domiciles under one roof

Mr Gessinger, for some time now, Universal Investment has been offering its decades-proven service quality in the Irish domicile as well. What does this mean for fund initiators?

Andreas Gessinger: Today, we are in a position to let our clients choose their preferred fund location freely: Germany, Luxembourg, or now Ireland. As a Super ManCo, we provide the infrastructure for UCITS funds and Alternative Investment Funds (AIFs) in all three domiciles. Besides our independence and extensive experience, fund initiators value the fact that, as a “one-stop shop”, Universal Investment provides them with everything they need from a single source. In other words, all the services around fund setup as well as comprehensive services from risk management to monitoring of outsourced services. Of course, we also meet all applicable requirements of the relevant regulatory authorities.

When it comes to efficient administration and structuring of any asset class from securities to real assets, we support our clients with the same proven expertise across all three fund locations.

Do you recommend one domicile over another to fund initiators? Or do you remain neutral?

Basically, we are completely objective regarding any location preference. We are equally happy to offer our services to fund initiators in Luxembourg, Germany, or Ireland. With our presence in these three domiciles, we can always accommodate our clients’ objectives or personal preferences. However, we have observed certain trends among our clients. For example, an asset manager based in Germany who wants to launch a fund and distribute it in Germany or possibly the DACH region might find that the “DE” country code in the ISIN can adds a level of familiarity and reliability for investors.

So, Luxembourg and Ireland then come into play as fund domiciles for international distribution?

Correct. Both are established fund hubs with a strong infrastructure of sub-service providers for initiation. And although a UCITS fund, as a European-regulated product, always remains a UCITS fund and there is hardly any difference from an investor’s perspective whether it is domiciled in Germany, Luxembourg, or Ireland, the country codes “LU” and “IE” can offer advantages. International distribution authorisations or country registrations are often easier to obtain. And launching funds in Luxemburg or Ireland may also prove more practical in terms of banking or platform connections. International distribution partners find it easier to deal with fund structures established in Luxembourg or Ireland. SICAVs and ICAVs are internationally well-known and recognised.

What might influence fund initiators with international ambitions to choose Luxembourg or Ireland?

It may simply be a matter of culture. International players with an Anglo-Saxon background often feel more at ease with Ireland, due to the language and the legal system which may seem more familiar than that of Luxembourg. There are also other factors that speak for Ireland, even for a fund initiator from mainland Europe. Currently, for example, we see that fund launches in Ireland can be executed faster than in Luxembourg. Therefore, if time-to-market is an important criterion, Ireland can be a good choice. Additionally, all necessary services such as those provided by custodians are generally competitively priced, ensuring no cost disadvantage.

Tax aspects are also often mentioned in connection with fund launches in Ireland. What should be taken into account?

It is difficult to make blanket statements in this context. However, there are cases where it can be interesting from a tax perspective to launch a fund in Ireland. For example, there is a favourable double taxation treaty between the US and Ireland but not with Luxembourg. This can have a positive effect if you have a high allocation of US equities in your fund portfolio. And this is often the case even in global equity funds. Furthermore, Ireland does not have a subscription tax on negotiable securities (“taxe d’abonnement”) as Luxembourg does.

Do you also offer fund structures for alternative, less liquid investments at all domiciles, in addition to UCITS and OGAW funds?

Yes, this applies to both Luxembourg and Ireland. In addition to ICAVs, we can also support the launch of contractual funds in Ireland, and the Alternative Investment Fund (AIF) is available as a legal form for less liquid assets. The Investment Limited Partnership (ILP) is now on an equal footing with the better-known REIT under Luxembourg law.

Overview: Universal-Investment Ireland Fund Management Limited