The administrative burden of the increasingly popular Ucits funds being rolled out by European hedge funds (often termed ‘Newcits’ because they replace existing strategies) means firms in Ireland are being required to staff up.

Ireland’s fund administrators have reasons to be thankful for the impending EU-driven Alternative Investment Fund Management Directive.

Ucits, European funds called Undertakings for Collective Investment in Transferable Securities, are exempt from the new rules – one of the reasons why they’re currently the fastest growing segment of the hedge fund industry.

These funds are largely domiciled in Dublin and Luxembourg, which means Ireland is benefiting from their new-found popularity.

There are nearly 4,700 Irish-domiciled Ucits funds with a net asset value of over €652bn as at March 2010. This is a 9% rise on 2009 and the highest ever recorded, according to figures from the Financial Regulator.

The establishment of Ucits funds is driven by “investor demand, the need for regulatory certainty and distribution possibilities”, says Gary Palmer, chief executive of the Irish Funds Industry Association (IFIA).

“It’s clear that Ucits are increasingly becoming must-have offerings for many hedge fund managers,” he adds.

All this means more work for fund administrators in Ireland. Funds are required to have independent custodians and administrators, and there’s a need to show net asset value (NAV) on a daily basis – rather than monthly, as is the case for a typical hedge fund.

Firms are already hiring – BNY Mellon intends to add up to 75 people this year, while State Street and JP Morgan are both adding to their ranks in Ireland, according to recruiters.

“Most of the major fund administrators are staffing up on Ucits expertise,” confirms Fintan Lawler, banking and financial services consultant at Hudson in Ireland. “It’s a complex, pressurised and deadline-driven role, and very difficult for fund administration professionals to switch across to without previous experience.”