Funds industry may grow by $1tn

The Irish funds industry could grow by another $1tn (€734m) and add up to 10,000 jobs over the next six years, according to a new report by the consultancy firm, PricewaterhouseCoopers.

Mon, 10 Feb, 2014 - 00:00

John Walsh, Business Correspondent

There are currently €2.5tn of funds under management in this country, employing roughly 20,000 people.

“Assets under management in Ireland have the potential to grow to €3.5tn by 2020 if the industry remains competitive, develops strong connections with emerging new funds centres, and continues to market itself positively.

“This growth in assets under management has the potential to yield an additional 7,000 to 10,000 [direct and indirect] new jobs in Ireland by 2020,” said Andrew O’Callaghan, asset management partner, PwC Ireland.

“This new growth will likely come from emerging markets in Asia and Latin America. We expect Hong Kong and Singapore to emerge as strong funds centres and develop connections with Ireland, Luxembourg, and the UK.

“The increased globalisation of the industry and the rise of a middle class in emerging markets represent a significant opportunity,” he added.

According to PwC, the growth in the global funds industry will be driven by an increase of mass affluent and high-net-worth-individuals South America, Asia, Africa, and the Middle East; the expansion and emergence of new sovereign wealth funds with diverse agendas and investment goals; and, the increasing defined contribution schemes, partly driven by government-incentivised or government-mandated shift to individual retirement.

However, Ireland needs to remain competitive to capitalise on the growth in the funds industry. “The danger is that if Europe becomes less competitive for a US fund manager to place their funds than Singapore and Hong Kong then clearly we will be in danger of losing that business.

“Notwithstanding this, with a 10% share of European assets invested in funds currently and having an excellent base from which to grow, huge opportunities remain for further job creation and progress in Ireland,” PwC said.