I was delighted to attend the Irish Funds London Alternative Investment Seminar on 31 March 2022. It was a very informative event with invaluable insights on key developments relevant to alternative investment.
Themes worth highlighting from the seminar include:
- Digital assets – Imminent changes to the regulatory framework, new market dynamics and technological innovation are all key drivers for crypto and digital assets rapidly evolving in the alternative investment funds space. Web 3 and the metaverse are also expected to significantly reshape the alternative investment world. Managers are considering new opportunities in the digital sector and how to integrate those in the context of the upcoming legislative framework.
- ESG – There is an increased focus on ESG throughout the funds industry with managers across a variety of asset classes integrating ESG into their investment strategies. Alternative investments present a great opportunity for further development in this area as investors continue to seek investments that will meet their sustainability needs.
- Structuring considerations – With the introduction of new legislation, the Irish investment limited partnership is seen as a viable option for a variety of alternative investment strategies. Private equity and debt managers in particular have been utilising this structure. Managers are increasingly seeking to establish tax resilient and sustainable structures in Ireland (with life of 7+ years) and, as such, greater strategic consideration is going into the establishment of alternative investment structures. The ICAV structure is extremely popular and its use is expected to increase as an alternative to non-regulated structures as a result of recent updates to tax regulation, such as OECD BEPs and EU ATAD.
- Size of the Irish funds industry – Assets under management have reached €4.7 trillion.
- Looking forward – The importance of maintaining and fostering the relationship between the Irish and UK funds and asset management industries, specifically in the context of alternative investments, was highlighted. The global macroeconomic outlook, including growth, inflation, interest rates and conflict, is expected to play a significant role in the funds industry for the next few years. While it is difficult to make forecasts on a global scale, a lot of observers are drawing comparisons of the current macroeconomic outlook with that of the 1970's recession. Constraints on supply are currently playing a significant role in respect of limitation on growth and inflation. While some governments are increasing interest rates in order to stabilise the economy, it is expected that the ECB will move interest rates to 0%. Managers are monitoring opportunities connected with the UK market and considering the potential impacts on investment returns and liquidity based on current and future economic and political developments.
The overall message from the seminar is that the rapidly changing environment in terms of economics, political developments, technology and sustainability are key areas of focus for managers.