I was delighted to moderate the panel discussion "The Evolution of Funds – What's on Trend?" at the Irish Funds North American Digital Seminar yesterday. Thank you to my panellists, Gavin Byrnes, Anna Dragesic, Juan Lois and Stéphane Janin for the fascinating insights on the issues that are likely to shape the evolution of how fund products are developed, distributed and managed.

It was interesting to see the results of our poll on the factors that are most likely to have the greatest impact on fund development trends over the next 2-3 years. While it was not really a surprise that ESG is the top priority for 50% of respondents, it is worth noting that 21% see Fintech/Digital Finance as having the greatest impact with asset class driven returns and regulation, being 18% and 11% respectively.

Key highlights from the discussion include:

  • the integration of ESG factors into the decision making process is becoming foundational to the product development process;
  • three key trends having a positive impact in the ESG space are improved data transparency, technological developments and changes in social norms;
  • the increased focus on liquidity risk management and leverage is set to continue and is likely to have a significant impact on fund development in the coming years;
  • a key theme in the credit space is the manufacturing of hybrid funds i.e. those that combine allocation to public and private markets, in order to drive returns;
  • the demand for UCITS and other fund products in Asia continues;
  • it remains to be seen whether the boom in Special Purpose Acquisition Companies (SPACs) has in part been driven by the pandemic and limitations on traditional fund raising during this period or is here to stay; and
  • the recent enhancements to the Irish Investment Limited Partnership (ILP) make Ireland a credible and logical option for the establishment of private funds.

The key message being that sustainable finance and ESG are likely to continue to dominate the landscape for the coming years.