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Irish fund industry grows strongly in 13

Tuesday, March 25 11:37:59

The net asset value of investment funds (IFs) resident in Ireland increased by 2.8pc in the last three months of last year to E1.07 trillion from E1.041 trillion in the previous quarter as the industry here attracted more funds.

Latest Central Bank data shows that net investor inflows to funds accounted for around half of this increase, while equity prices drove positive revaluations.

There were some notable inflows to euro peripheral country debt, it said.

There were net investor inflows to IFs for the eighth successive quarter, amounting to E14.3 billion in Q4, which accounted for around half of the overall increase in net asset value. Net positive evaluations in the asset portfolios of IFs, of E14.6 billion, were driven entirely by increases in equity prices in Europe and the US.

Equity prices in emerging markets declined significantly in Q4 but the exposure of Irish funds to these assets is very low.

Looking at IFs investment strategies, there were significant net flows into equity holdings in the second half of 2013 relative to debt holdings, which marks a reversal of a strong relative preference for debt security holdings in the first half of the year.

The value of debt security holdings have largely stabilised, following sharp negative revaluations in Q2. Within euro area debt security holdings, there were some notable inflows into peripheral country debt in Q4 2013, reflecting improved market sentiment towards euro area and global economic prospects. Spanish debt was the main beneficiary, with holdings rising to E7.5 billion as IFs invested an additional E1.1 billion during Q4, while Italian debt holdings increased slightly to E16 billion as IFs invested an additional E0.4 billion. Conversely, there were outflows of E1.4 billion and E0.4 billion from German and French debt securities respectively. These portfolio shifts could be seen as a return to more normal conditions as they represent the unwinding of portfolio shifts that took place during the euro area debt crisis, the Central Bank said.