Welcome to thethis presentation, unless required to do so by applicable law. If the recipient is a consultant acting on behalf of a third party client, the recipient may share such

2

irishfunds.ie

11 March 2019

Welcome to the

Irish Funds Chicago Seminar

irishfunds.ie

Premium Sponsors

irishfunds.ie

Premium Sponsors

irishfunds.ie

Event Sponsors

irishfunds.ie

Brian Forrester,

Chairperson, Irish Funds

Partner, Deloitte

Industry Update and Key Developments

Chicago Seminar

11 March 2019

irishfunds.ie

The Irish Funds Industry: a snapshot

irishfunds.ie

Total Assets Under Administration –

Split between Irish & Non Irish Funds

Source: All data sourced from Central Bank of Ireland

989

1,271

2,0521,946

2,079

2,515 2,441

2,901

3,754

4,097 4,1324,310

5,289

4,823

689959

1,188899 1,078

1,288 1,3651,619

1,854 2,020 2,062 2,194

2,875 2,770

300

313

864 1,0471,001 1,227 1,075

1,282

1,900 2,077 2,0712,116

2,4142,053

0

1,000

2,000

3,000

4,000

5,000

6,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Dec-18

US

D B

illi

on

Total Domiciled and Non-Domiciled

Assets Under Administration

Total Non Domiciled Total Domiciled

irishfunds.ie

Fastest Growing of Largest European Fund

Domiciles

2011 2012 2013 2014 2015 2016 2017 Q3 2018

Europe 0% 13% 23% 42% 58% 78% 97% 101%

Luxembourg 0% 14% 25% 48% 67% 77% 98% 104%

Ireland 0% 16% 27% 57% 80% 98% 126% 140%

France 0% 9% 10% 14% 21% 29% 37% 38%

Germany 0% 13% 24% 40% 53% 66% 80% 85%

UK 0% 17% 35% 59% 79% 77% 99% 101%

0%

20%

40%

60%

80%

100%

120%

140%

% G

row

th

Europe Luxembourg Ireland France Germany UK

irishfunds.ie

With Global Distribution

Source: Lipper IM

• Data from the Central Bank of Ireland shows Irish domiciled

funds have investors from 90+ countries around the world

irishfunds.ie

Brexit - three interdependent themes

Distribution

Management

Models

(‘Delegation’)

Growth

OVER 2,700 IRISH

FUNDS SOLD TO UK

INVESTORS

$750bn

IN IRISH FUND ASSETS

MANAGED BY 190+ UK

FIRMS IN IRELAND

Continuity in UK investor

access to Irish funds

Continuity in

UK firm

management

of Irish funds

Increase Ireland’s growth

trajectory as an

international asset

management centre

SOURCE: Lipper IM Dec 2017

Monterey Ireland Fund Report 2017

Current context Target outcome

irishfunds.ie

Conclusion

EU Member & Strategically Positioned

+

International Hub for Globally Distributed Investment Funds

+

Unrivalled Experience and Expertise & the Widest Range of Fund Structures

irishfunds.ie

Brian O’Brien,

Consul General of Ireland, Chicago

Irish Consul General’s Address

irishfunds.ie

Carl Tannenbaum,

Chief Economist, Northern Trust

Macroeconomic Outlook for 2019

15northerntrust.com | © NorthernTrust 2019northerntrust.com | © NorthernTrust 2019

Decelerating and De-escalating

Economic Themes For The Balance Of 2019

March 2019

Carl Tannenbaum

Chief Economist

Northern Trust

GLOBAL ECONOMIC RESEARCH

@NT_CTannenbaum

16northerntrust.com | © NorthernTrust 2019

THEMES

Is The Expansion At Risk?

• Global growth is settling

Political Complications

• Setting sound policy is getting harder

The Trials and Tribulations of Trade

• China/U.S. ties are the key focus

Central Bankers Under Stress

• Dealing with a difficult combination of circumstances


HEADING FOR A RECORD?

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

2016 2017 2018 2019E

SAA

RU.S. Real GDP Growth

120

115

106

92

80

1991-2001

2009-Present

1961-1969

1982-1990

1938-1945

Longest U.S. Economic Expansions(in Months)

• Growth is tapering, as expected

• The current expansion is likely to set a new standard

Sources: Haver Analytics, Northern Trust, National Bureau of Economic Research


IRELAND CONTINUES TO PROSPER

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

2009 2012 2015 2018

Year

ove

r Ye

ar

Irish GDP Growth

-18%

-16%

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

2007 2009 2011 2013 2015 2017

4-q

uar

ter

mo

vin

g av

erag

e

Ireland: Deficit/GDP

•Still setting a strong pace

•Budget is now roughly balanced

Source: Haver Analytics


GIVING PAUSE

46.0

50.0

54.0

58.0

62.0

Jan-17 Jul-17 Jan-18 Jul-18 Jan-19

Purchasing Manager’s Indices

U.S. China Canada Eurozone

Expanding

Contracting

• Leading indicators and confidence are moderating

• Equity markets reflect concern

Sources: Haver Analytics, Bloomberg

70

80

90

100

110

Jun-18 Aug-18 Oct-18 Dec-18

Jun

e 2

01

8 =

10

0

Equity Market Performance

U.S. Canada Eurozone China


BROAD TRENDS IN TRADE

0%

10%

20%

30%

40%

50%

60%

70%

1960 1970 1980 1990 2000 2010

Per

cen

t o

f G

DP

Global Merchandise Trade

• Globally, tariffs have moderated substantially

• Trade flows have consequently advanced dramatically

Sources: IMF, World Bank


BENEFITS DELIVERED

• Free trade has lowered prices and reduced poverty

Sources: World Bank, IMF


DETAILS MATTER

• Income inequality has been rising around the world

• Differences have been accentuated since the 2008 crisis

Sources: World Inequality Report, Federal Reserve

U.S. Share of Wealth by Wealth Percentile


SIGNIFICANT REGIONAL DIFFERENCES

Source: metro.co.uk

Source: University of Michigan

Source: The Economist


ARE INTERNATIONAL COOPERATIONS AT RISK?


CHINA IS A GLOBAL FOCUS

• A renewed desire to level the playing field

• Key White House advisors advocate confrontation

Sources: OECD, Amazon.com

0.33

0.17

0.15

0.09

0.07

0.05

0.04

0.02

China

Canada

Australia

U.S.

OECD Average

Japan

U.K.

Germany

Index of RestrictionsOn Inbound Foreign Investment

(0 = fully open; 1 = fully closed)


CHINA FEELS THE PINCH

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

11.0%

2010 2012 2014 2016 2018

SAA

RChina: Real GDP Growth

44

46

48

50

52

54

56

2010 2012 2014 2016 2018

China: PMI(Above 50 = Expanding)

Manufacturing

New Export Orders

• Current and leading indicators raise concerns

• A hard landing in China would be felt globally

Source: Haver Analytics



IRISH EXCHANGES


MONETARY NORMALIZATION

• Crisis-era accommodation is being unwound

• Quantitative easing is on the wane

Source: Bloomberg, Haver Analytics

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

Fed BoE BoC ECB BoJ

Central Bank Deposit Rates

Jan-19 Post-Crisis Low

20%

28%

40%

33%

100%

25%

22%

21%

55%

47%

U.S.

U.K.

Eurozone

Ireland

Japan

Central Bank AssetsAs a % of Nominal GDP

Mar-14 Sep-18


INFLATION

80

85

90

95

100

105

110

115

2015 2016 2017 2018

20

15

= 1

00

U.S. Inflation (CPI)

Food Apparel

Housing Medical Care

New Vehicles Airfare

• Struggling to hit targets, even amid very low unemployment

• Something secular may be going on

Sources: Bureau of Economic Analysis, Haver Analytics

1.8%

1.1%

1.8%

0.5%

0.4%

1.2%

U.S.

Eurozone

U.K.

Ireland

Japan

Australia

Core Inflation Indicators(Year over Year)


DEEPLY IN DEBT

• Government debt has expanded since the crisis

• Consumer debt is still uncomfortably high in several countries

Sources: Haver Analytics, World Bank

80%

120%

160%

200%

240%

2002 2005 2008 2011 2014 2017

Household Debt/Income RatioU.K. U.S. Australia

Canada Ireland

0% 50% 100% 150% 200% 250%

Eurozone

UK

USA

Japan

Canada

Ireland

As a Percent of GDP

Government Debt

2017 2006


UNPREPARED TO RETIRE

• Unfunded pension obligations are immense

• Demographic trends will bring these to the surface

Sources: Citigroup, World Economic Forum

2 2 3 411 11 8

28

9 613

85

119

2633

137

$ T

rilli

on

Size of the Retirement Savings Gap

2015 gap 2050 gap


PARTING THOUGHTS

Markets and the economy have proven very resilient

• Performance has been outstanding, despite concerns

We need to recall why international commerce is so

beneficial

• Nationalism is damaging to global markets

The risk of an economic policy error is rising

• Policy formulation and communication are being done

very differently


BIOGRAPHY

Carl Tannenbaum is the Chief Economist for The Northern Trust. In this role, Mr. Tannenbaum briefs

clients and colleagues on the economy and business conditions, prepares the bank’s official economic

outlook and participates in forecast surveys. He is a member of the bank’s investment policy

committee, its capital committee, and its asset/liability management committee.

Mr. Tannenbaum publishes weekly commentaries and is frequently interviewed by media outlets such

as The Wall Street Journal, Bloomberg, and Reuters.

Prior to joining Northern Trust, Mr. Tannenbaum spent four years at the Federal Reserve, where he led

the risk section. He was deeply involved in the central bank’s response to the 2008 financial crisis,

helped to create and conduct its stress testing program, and advised senior Federal Reserve leaders on

developments in banking and the financial markets.

Mr. Tannenbaum began his career in banking at LaSalle Bank/ABN AMRO, a global banking

organization with $1 trillion in total assets. He served for more than 20 years there as the organization’s

Chief Economist and Head of Balance Sheet Management.

Mr. Tannenbaum is the current Chairman of the American Bankers Association’s Economic Advisory

Committee and is a past Chairman of the National Association for Business Economics, the Conference

of Business Economists, and the North American Asset/Liability Management Association.

Mr. Tannenbaum also serves on the Board of Working in the Schools (WITS), a literacy organization

that supports the Chicago Public Schools.

Mr. Tannenbaum holds an M.B.A. and a B.A. in finance and economics from the University of Chicago.

Carl R. Tannenbaum

Chief Economist

Northern Trust


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Products and services provided by subsidiaries of Northern Trust Corporation may vary in different markets and are offered in accordance with local

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@NT_CTannenbaum

Moderator:

Panellists:

irishfunds.ie

Domiciling in Ireland – Fund Structures and

Advantages

Brian Lavery, PwC

Michael James, Nuveen

Tony Spratt, McCann Fitzgerald

Siobhán McBean, Arthur Cox

irishfunds.ie

Colin Feely,

Partner, Grant Thornton

Update on Regulation - Brexit & Beyond

irishfunds.ie

Next steps

Consideration to be given to

the impact of European

Parliament elections to be

held on May 23-26, 2019?

irishfunds.ie

Possible outcomes

Norwegian Model:

European Economic Area (EEA) +

European Free Trade Association (EFTA)

Mexican or Canadian Model:

Free Trade Agreement (FTA)

Swiss Model:

Bilateral accords + EFTA

Turkish Model:

Customs union

World Trade

Organization (WTO)

irishfunds.ie

Possible outcomes

Norwegian Model: European Economic Area (EEA) + European Free Trade Association (EFTA)

The UK could join the EEA and the EFTA and continue to have full access to the single market. It would have to adopt EU regulations and standards. Norway also

co-operates with the EU on a broad range of policy areas through the EEA agreement and other bilateral agreements. The EEA was established in 1994 and three EFTA

states (Norway, Iceland and Liechtenstein) are currently members. Would have to contribute to the EU budget but have no say but would have some autonomy.

Turkish Model: Customs union

The UK could enter into a customs union with the EU. Goods could be exported to the EU without tariffs or customs restrictions, but the UK would be required to

comply with various areas of EU regulation. Many sectors may be excluded from a customs union and services, including financial services (hard to monitor), may not

be covered at all. A customs union has been in place between the EU and Turkey since 1995. Could negotiate in FS but would be difficult, if an agreement was made

the EU would look for equivalency on regulation and a lot of restrictions, probably not agreeable with the Brexiteers.

Swiss Model: Bilateral accords + EFTA

The UK could agree a set of bilateral agreements governing access to the single market, sector by sector. It would not get full access to the internal market but would

also not be required to comply with EU law except in relation to exports and investments into the EU. The UK could also become a member of EFTA. Switzerland is a

member of EFTA and has negotiated a special relationship with the EU through various bilateral accords and trade treaties. Could negotiate in FS but would be

difficult, if the an agreement was made the EU would look for equivalency on regulation and a lot of restrictions, probably not agreeable with the Brexiteers.

Mexican or Canadian Model: Free Trade Agreement (FTA)

The UK could agree its own free trade agreement with the EU. This could lead to a single comprehensive deal rather than piecemeal agreements. It could potentially

involve greater continuity of the single market at the cost of political autonomy. Mexico has a free trade agreement in place with the EU for goods and services.

The EU is currently Mexico’s largest export market after the US. Practically all trade in goods between the EU and Mexico will now be duty-free, including in the

agricultural sector. Canada also FTA with the EU called Comprehensive Economic and Trade Agreement (CETA).

World Trade Organization (WTO)

The UK could rely on existing WTO rules and there would then be no negotiations for new agreements between the EU and the UK. The UK would gain full autonomy

over its trade policy. However it would no longer have dual representation as both the UK and as a member of the EU. China joined the WTO in 2001 after 15 years of

negotiation. China is currently the EU’s biggest trading partner after the US. The UK is already a member in its own right, but it will have to agree a new list of tariff

schedules once it is no longer part of the EU, which could take time.

irishfunds.ie

Temporary measures

• Temporary permissions regime (TPR)

– TPR will allow currently passported EEA firms to operate in the UK for a limited period

– The TPR alleviates some short term risks of a hard Brexit

– EEA firms need to notify the FCA by 28 March 2019

– The temporary permission is effective from date of exit for 3 years

– This is only available where the fund is being marketed in the UK

• EU Memorandum of understanding (MOU)

– MOU is required between the regulator of the EU member state and the UK

– Expected an MOU will be agreed between the CBI and the UK prior to 29 March 2019

– TPR and MOU are short term solutions to avoid the impact of a hard Brexit

irishfunds.ie

Establish an EU27 domiciled UCITS management or

AIFM entity

ESMA has directed European national competent authorities (NCAs) e.g. the Central

Bank of Ireland (CBI), to assess UCITS Manco and AIFM applications based on 9

general principles.

1. No automatic recognition of existing authorisations

2. Authorisations granted by EU27 NCAs should be rigorous and efficient

3. NCAs should be able to verify the objective reasons for relocation

4. Special attention should be granted to avoid letter-box entities in the EU27

5. Outsourcing and delegation to third countries is only possible under strict conditions

6. NCAs should ensure that substance requirements are met

7. NCAs should ensure sound governance of EU entities

8. NCAs must be in a position to effectively supervise and enforce Union law

9. Coordination to ensure effective monitoring by ESMA

irishfunds.ie


AIFM entity

• Staffing within a UCITS Manco/AIFM is of particular focus

• Expected roles/functions within a UCITS Manco/AIFM

– The CEO

– Head of Investment/CIO

– Head of Compliance

– Head of Distribution

– Head of Risk

• The requirement for and time commitments of the above roles is determined on a case

by case basis

irishfunds.ie


AIFM entity

Where delegation of portfolio/risk management function from the UCITS Manco/AIFM back to a UK Entity is planned:

– UCITS Manco/AIFM must demonstrate it will maintain control over these functions,

– UCITS Manco/AIFM will maintain responsibility for the outsourced function

– Ultimately the CBI are focusing on satisfying the substance principle.

"I would like to make it clear that we will not lower our assessment standards and if you have not delivered on our expectations we will not authorise you. Our assessment standards include ensuring you are properly capitalised, have sufficiently experienced and knowledgeable people based in Ireland, a clear plan to when the firm will be operationalised and robust risk frameworks in place". Michael Hodson, Director of Asset Management and Investment Banking at the CBI

irishfunds.ie

Super Manco entities

– Dual authorised entity supporting the regulatory compliance of UCITS

and AIF entities

– Multiple fund ranges are managed

– Service a range of UCITS and AIF Strategies with a single

– legal entity

– Board of directors

– capital requirements

– pan European passport

– Efficient solution to the Brexit issue

irishfunds.ie

Future growth

Tax and

customsLocation

Funding and

ownership

Supplier and

supply chainPeople

Core

operations

Legal, data and

regulation

Customers and

markets

Nine area’s of focus

irishfunds.ie

Nine lenses

Customers and markets

Transitional Permissions Regimes effectively enables EU financial services firms, who currently passport into the UK and who

wish to continue after ’Exit Day’, to do so for up to three years.

The UK government has indicated that they will allow firms with ‘single European passports’ to enter into the UK and continue

carrying out business in the UK, for a limited period even if the passporting regime disappears after Brexit. However, it is

important to note that the EU has not yet formally reciprocated this regime and barriers for UK firms to operate into the EU may

persist. The outcome here is uncertain.

Legal, data and regulation

Transfers of personal data from the UK to the EU will continue without interruption. This is because the UK plans to make an

adequacy decision in favour of the EU, based on the degree of alignment between the UK and EU’s data protection laws. The

UK will keep this position under review. However, transfers of personal data from the EU to the UK will be impacted. The

guidance suggests that we do not yet know exactly how these transfers will be affected. The EU may make an adequacy

decision in favour of the UK, allowing the free flow of personal data outside the EU, to the UK;

Core operations

Any manager will need to consider core operations that are performed outside the EU.

People

The Irish talent pool in the industry is reaching a critical point, can the Irish economy in the short term absorb all the additional

requirements? Will talent move from the UK? Will the new arrivals in high paid jobs drive property prices higher in the Dublin

area and overall cause wage inflation?

irishfunds.ie

Nine lenses

Supplier and supply chain

The capacity of UK firms to market their fund products within the EU 27 may be severely impacted by a hard Brexit. The capacity to

sell EU domiciled funds into the UK may also be compromised. UK firms, even those with UCITS or EU AIFs, may find that although

they have the correct product range, the lack of a MiFID authorisation or of a UCITS ManCo or AIFM authorisation means that they

cannot market their products themselves and have to rely on third parties, or in the case of AIFs, on private placement regimes. Sales

into the UK of EU products may likewise suffer a loss of straight forward marketing opportunities, with product producers possibly

having to duplicate structures for the different market places.

Funding and ownership

No implications, entities need to be setup in EU.

Location

Detailed analysis needed to determine optimum location, considerations would be regulatory approval and regulatory environment,

costings including taxation, taxation obligations, costs post transfer and language.

Tax and customs

Taxation driven by location of new setup. ManCos will need to consider the “Attribution of Management Fees” between the newly

established/appointed Irish ManCo and the UK and/or US ManCo that will continue to perform certain functions delegated to it.

Future growth

Continued growth of Super ManCo entities.

50

irishfunds.ie

Any questions?

Colin Feely

Partner, Grant Thornton

Moderator:

Panellists:

irishfunds.ie

Fund Distribution & Market Access in

Europe

Lorcan Murphy, Acolin

David Skelding, Spokes Advisory

Anne Marie Thurston, Nuveen

Paul Nunan, Link Fund Solutions

irishfunds.ie

Kieran Fox

Director of Business Development,

Irish Funds

Closing Remarks

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Drinks Reception Sponsor

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Premium Sponsors

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Premium Sponsors

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Event Sponsors

57

irishfunds.ie

11 March 2019

Irish Funds Chicago Seminar

Documents

Welcome to thethis presentation, unless required to do so by applicable law. If the recipient is a consultant acting on behalf of a third party client, the recipient may share such