IRELAND: Central Bank of Ireland Release Statistical Data for Quarter 1, 2012 on the Investment Funds Industry

Friday July 6 2012

Funds-Axis would like to draw your attention to the recently released statistical data from Quarter 1 2012 by the Irish Central Bank in relation to the Investment Funds Industry in Ireland.

Please find a link to the data below;

Q1 2012 – Investment Funds Data

Some of the highlights of the data include:

• All fund categories performed positively during Q1 2012, boosted by apparent expanding investor confidence. It is an interesting indicator of lingering investor caution to note that new subscriptions did not follow performance over this or the previous quarter, with new investors favouring supposedly less volatile bond funds over strongly performing equity funds;

• Irish resident Investment Funds (“IF’s”) expanded strongly in Q1 2012, driven by performing global equity markets and apparent expanding investor confidence evident in new subscriptions. When reclassifications are excluded, IF’s, measured by total shares/units in issue, increased in value to €819.8 billion at end Q1 2012, up from €768.7 billion at end Q4 2011.  This increase is accounted for by revaluations of €34.9 billion and positive net transactions of €16.2 billion;

• Irish IFs are owned mainly by non-residents, with 26 per cent held by other euro area residents and 68 per cent held by those outside the euro area and just 6 per cent owned by Irish residents. This breakdown reflects a significant move in ownership away from euro area residents to the rest of the world over recent quarters. Similarly most assets owned by Irish resident IFs are domiciled outside the state. When unclassified assets are excluded, just 9.4 per cent of capital is invested in Irish assets, 13.5 per cent invested in the rest of the euro area and 77.1 per cent invested outside the euro area;

• The composition of assets within IFs displays some items of note.  A renewed interest in corporate paper was evident, particularly relating to the banking sector, and may reflect the impact of the availability of ECB three year loans to banks announced in December 2011. This positive sentiment extended to non-euro area banks, with UK banks experiencing positive inflows of €13.3 billion compared to inflows of €9 billion for euro area banks. The higher figure for the UK may be partially accounted for by rebalancing from sovereign to corporate bonds as UK government bonds experienced an outflow of €3.7 billion, to close at €50.1 billion, alongside upward revaluations of €0.7 billion. UK banks’ participation in ECB operations, through their subsidiaries and branches, is also likely to have contributed to investor confidence; and

• There was a movement out of US sovereign bonds, amid net outflows of €2.1 billion and negative revaluations of €3 billion, to close at €45 billion, or 5 per cent of all investments. These negative US revaluations in euro terms were partly driven by the euro depreciating by 2.8 per cent relative to the US dollar over Q1 2012. German government bonds experienced positive net inflows of €0.9 billion and account for €17.4 billion of bond assets, but holdings still remain low relative to UK and US government bond assets. Holdings of Spanish sovereign bonds experienced outflows of €0.2 billion and remained small at €1.3 billion, whilst holdings of Italian sovereign bonds experienced inflows of €0.2 billion, to close at €5.7 billion.

Should you wish to discuss the contents of this article, please don’t hesitate to contact the author on info@funds-axis.com.