Ireland Wins ETF Assets; DeAWM Pours In €800 Million

Ireland has been scooping up exchange traded fund (ETF) assets in Europe due to tax advantages and a well-developed infrastructure and is set to welcome almost €1 billion more from Deutsche Asset & Wealth Management (DeAWM) this month as the provider relocates part of its fund range.

New research from Cerulli Associates, published in June, shows that flows into Dublin-domiciled ETFs accounted for the vast majority – 85 percent – of European ETF flows in 2014, and assets under management in these ETFs has tripled since 2011 to €223 billion.

This compares to other domiciles, whose ETF AUM rose by 56 percent in the same period.

Ireland benefits from double taxation treaties with countries like the U.S. and has no tax on investment funds. Barbara Wall, Europe research director at Cerulli, pointed to providers looking to cut costs such as Vanguard, which slashed fees on its S&P 500 ETF to 0.07 percent.

“With costs in this sort of bracket, tax differences will be keenly felt,” she said.

Wall also referred to Deutsche Asset & Wealth Management, which will switch $939 (€827) million of ETF assets from Luxembourg to Dublin, starting on 10 June, and convert them to physical replication. The five funds subject to change track both the market cap and equal weight version of the S&P 500, the Russell 2000 and mid cap index, and the FTSE All-World ex UK index. These funds will stop trading for six working days as they complete the move to Ireland.

The Cerulli report dismissed Luxembourg’s attempt to win ground by scrapping its subscription tax for ETFs as “too little, too late”, and is also “sceptical” that the UK’s scrapping of stamp duty on London-domiciled ETF trading will help it become a more prominent player.

The trend has also been followed by the likes of UBS, Lyxor and State Street’s SPDR ETF range, which also relocated to Dublin in July last year.