Key considerations for asset managers when choosing fund domiciles
What factors should asset managers consider when choosing between European cross-border fund domiciles?
Cuan Coulter, global head of Asset Managers and head of UK and Ireland at State Street, highlights some of the key considerations for asset managers when choosing between the two cross-border fund domiciles, namely Ireland and Luxembourg, in a recent Q&A with Nick Fitzpatrick, editor of Funds Europe.
Asset managers tend to choose fund domiciles based on cultural affinity, history of the firms and where their service providers already have footprints, rather than just the regulatory or tax aspects, according to Coulter. He said two major fund domiciles — Luxembourg and Ireland — have a lot of diverse offerings.
“Ireland benefitted from index or passive funds and developed a specialty in ETFs, while Luxembourg traditionally favored private market funds,” he said.
Once a fund gets domiciled and operates in the market, it starts generating a large amount of data. Coulter identified that though the addition of data to enhance decision-making is a big revolution in the asset management industry, asset managers face significant challenges when managing vast amounts of unstructured data.
“Investment processes have become more sophisticated, and they consume and aggregate large amounts of data which are not structured,” he said.
Structuring data on a large scale could be streamlined through the application of artificial intelligence (AI). Although we have yet to see a full industrial scale of the application of AI, Coulter noted that asset managers are increasingly relying on AI, and that the technology will be critical to making better informed investment decisions.