According to a report from Reuters this week, investment bank Morgan Stanley has taken the decision to move more than EUR1 billion of institutional assets from Luxembourg to Dublin in order to take advantage of more favourable conditions for the fund industry there.
The money, which is denominated in euros, sterling and dollars, is being transferred from the bank's Societe d'Investment a Capital Variable fund listed in Luxembourg. The bank told Reuters that it will divide the cash it holds from institutional and retail investors.
Morgan Stanley's business development manger Nick Hoar explained that this was because institutional clients prefer dedicated money market funds. Consequently, the more liquid conditions of the Dublin market, coupled with the lower trading costs swayed the bank's decision to move to the Irish capital. "You can get in and out of the funds quicker and in an easier way in Dublin," Hoar revealed. Many fund managers also subscribe to this view, as trades can be settled within one day, whereas in Luxembourg they must wait until the following day. The tax on funds is also higher in Luxembourg, which levies 0.01% on funds under management.
The bank said it is seeking to attract more money into the Dublin funds, which are able to invest in commercial paper, government and corporate bonds and asset backed securities.
The popularity of the Irish Stock Exchange for fund listings has seen a marked increase in recent months, and ISEQ has actively promoted this aspect of investing as the number of traditional equity listings have dwindled.
At the end of March 2003, ISEQ reported 1,429 listed funds, up 17% on the same time the previous year.
A comprehensive report on the offshore funds sector, including details of the regulatory regime in a number of top jurisdictions, is available in the Tax News Reports Shop at http://www.tax-news.com/reportshop
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