Amundi is accelerating its shift to domicile ETFs in Ireland after receiving regulatory approval to launch a selection of US equity ETFs already housed in Luxembourg, ETF Stream can reveal.
The French asset manager plans to duplicate six existing ETFs in Ireland, alongside launching two Climate Transition Benchmark (CTB) ETFs, in the latest sign of Dublin’s dominance in the ETF market.
Ireland has emerged as the place to domicile ETFs in Europe due to its favourable tax treaty in the US, the reputation of the Central Bank of Ireland (CBI) and world-class institutional knowledge.
Amundi started domiciling new ETFs in Ireland last May but its latest move would be the first time it has duplicated existing ETFs under its new Irish collective asset management vehicle (ICAV) umbrella.
An Amundi spokesperson told ETF Stream that the decision to mirror the ETFs was made to give clients “a high level of flexibility” and did not rule out merging the Luxembourg-domiciled ETFs into Ireland in the future.
“We are serving a variety of clients with different needs, from institutional to distributors and retail in all countries and regions. Our goal is to accompany them by offering a variety of options including notably a high level of flexibility in terms of fund domiciles,” the spokesperson said.
“That said and as usual, should we decide to implement a product evolution it will be as usual driven by client demand and investors will be informed in line with regulatory obligations and timelines.”
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The favourable tax treaty in the US is one of the key drivers for the move, with US equity ETFs domiciled in Ireland subject to a 15% withholding tax rate on dividends versus 30% for ETFs in Luxembourg and other jurisdictions.
Sergey Dolomanov, partner at William Fry, said he anticipates the move will eventually lead to Amundi shifting the range completely to Ireland.
“They are newly authorised funds so Amundi will probably be looking to merge the Luxembourg range into the new Irish ETFs,” he said.
Dolomanov added Luxembourg rules allow you to do fund mergers by issuing a notice to shareholders, rather than having to seek approval.
Duplicated ETFs:
Amundi S&P 500 ESG UCITS ETF (S500H)
Amundi MSCI World SRI Climate Net Zero Ambition PAB UCITS ETF (WSRI)
Amundi MSCI USA SRI Climate Net Zero Ambition PAB UCITS ETF (USRI)
Amundi S&P 500 Climate Net Zero Ambition PAB UCITS ETF (PABS)
New ETFs:
Amundi MSCI World ESG Climate Net Zero Ambition CTB UCITS ETF
Amundi MSCI North America ESG Climate Net Zero Ambition CTB UCITS ETF
Morgan Dunne, partner at McCann FitzGerald, said the move by Amundi can be seen as a big commitment to the jurisdiction.
“If an asset manager's fund range is domiciled in Luxembourg, a decision will need to be made as to whether the asset manager wishes to operate across the two jurisdictions or fully commit to Ireland." he said.
"Ireland is now such an attractive jurisdiction for ETFs that the operational burden of moving an ETF (or an entire fund range) to Ireland, or simply establishing an Irish ETF and then operating across the two jurisdictions, must be weighed up against the clear benefits of having an Irish domiciled ETF."
Ireland has extended its lead over Luxembourg as the place to domicile ETFs in recent years, with the two acting as the primary European domiciles of choice for UCITS ETF.
According to data from ETFbook, Ireland houses roughly 67% of the total European ETF market with $953bn AUM across 1,789 ETFs, versus $277bn for Luxembourg.
ETF Stream revealed earlier this year that BNP Paribas Asset Management (BNPP AM) is currently seeking regulatory approval from the CBI to begin domiciling strategies as well.
