The latest sign the tide of ETF domiciling is turning against Luxembourg came this week as ETF Streamrevealed Amundi received regulatory approval to duplicate domicile a series of existing ETFs in Ireland.
The French asset manager started domiciling in Ireland last May with the launch of 13 ETFs on its Irish collective asset management vehicle (ICAV) followed by a 10-strong suite of ESG ETFs last October and two climate transition benchmark (CTB) products yet to launch, ETF Stream revealed.
While the new launches showed the ETF issuer had been tempted by the Irish tax treaty advantage, this week’s news it would mirror domiciling ETFs in Ireland that are already domiciled in Luxembourg is a sign the latter’s days of housing Amundi funds may be numbered.
Supporting this view, the firm did not rule out merging its Luxembourg-domiciled ETFs into the duplicate Irish funds in future.
Sergey Dolomanov, partner at William Fry, said he believes Amundi will make the decision to merge its Luxembourg range into new Irish ETFs, with Luxembourg rules allowing fund mergers without having to seek shareholder approval.
Morgan Dunne, partner at McCann FitzGerald, added there is a clear operational burden borne by Amundi to move entire fund ranges to Ireland and it now must weigh up whether to run ETFs across two jurisdictions, or opt for Irish domiciling alone.
This pendulum shift is not just Amundi-focused. While the gap between Ireland and Luxembourg was not as wide in 2017 – the two housed $305bn and $115bn assets under management (AUM) respectively – this rift has grown to $953bn and $277bn today, according to data from ETFbook.
ETF Stream previously revealed BNP Paribas Asset Management is also seeking approval from the Central Bank of Ireland (CBI) to start domiciling in Ireland.
It bears considering the impact on costs and competition of Ireland being the only show in town for ETF domiciling in Europe.
Ask and you shall receive
Last week’s ETF Wrap looked at personality investing and whether recently-launched products such as the infamous Inverse Cramer ETF (SJIM) would gain any traction if they launched in Europe.
Matthew Tuttle, CEO of the firm behind the product, then reshared the article on Twitter with the caption: “Already speaking to the guys at [HANetf], if there is demand we will do it.”
Speaking toETF Stream earlier this week, Tuttle added he would consider bringing the Cramer strategies and others such as his product going short on Cathie Wood’s ARK Innovation ETF (ARKK) to Europe, however, he noted he would only launch strategies expected to surpass the break-even mark of $60m AUM.
The firm would look to enter Europe via a white-label ETF issuer but is still weighing up the competition amid ongoing discussions with HANetf and Leverage Shares.
ETF Wrap is a weekly digest of the top stories on ETF Stream
