IRELAND IS the fastest-growing of the major European fund centres, and is now attracting hedge funds away from traditional offshore locations, according to the inaugural Ireland Funds Report.

Ireland’s fund industry has fully recovered from declines suffered during the credit crunch, it says. The report, which is published by Finance Dublin, notes that the total assets of Irish-domiciled funds stood at €856 billion by the end of May, after dipping to €647 billion in 2008.

This recovery can be partly attributed to global growth trends. In the first quarter of the year, all major fund centres in Europe experienced asset growth, except for Italy and Spain.

Ireland displayed the strongest growth rate, with assets increasing in value by 9.2 per cent.

Long-standing factors in Ireland’s favour include attractive regulatory and tax regimes, the report says.

Moreover, Ireland’s position as a “gateway to Europe” means that it is being used as hub for Undertaking for Collective Investment in Transferable Securities (Ucits) funds.

The inclusion of Ireland in the Organisation of Economic Co-operation and Development’s “white list” of jurisdictions, which have substantially implemented various transparency standards, has given it a competitive advantage over some other offshore centres.

“As a result, some hedge fund managers have redomiciled funds in Ireland from other traditional offshore centres such as the Cayman Islands and the British Virgin Islands,” it says.

This in turn has prompted a number of international law firms to open funds practices in Dublin.

Daniel Lawlor, an associate at law firm William Fry, said that Ireland’s expertise in the area of exchange-traded funds (ETFs) has moved it to the forefront of European domiciles for this increasingly popular type of investment vehicle.