Industry Insights - Global Expertise, Irish Oversight: Building the Optimal Fund Delegation Model for the SIU

The EU delegation model underpins Europe's cross-border funds industry. As the Savings and Investments Union takes shape, the question is not whether delegation survives, but how Europe keeps an open investment architecture while ensuring fund management companies exercise real oversight.

Responsibility, Not Outsourcing

For three decades, the ability of an EU-authorised fund management company (FMC) to delegate portfolio management to specialist firms, regardless of where the specialist firm is located, has helped make UCITS and AIFs globally recognised products. Delegation lets an Irish fund draw on investment expertise where it resides, while responsibility, governance and investor protection stay anchored in Ireland.

Importantly, delegation is not the outsourcing of responsibility. The regulated management company remains ultimately accountable for the fund, its risks, its delegates and investor outcomes, and must retain sufficient resources, decision-making capacity, risk management and control. An FMC that cannot challenge, direct or replace its delegate is not operating a delegated model; it is a letter-box.

This matters for the Savings and Investments Union (SIU). The European Commission frames the SIU as connecting savings with productive investment, widening choice for savers and helping European businesses grow. A competitive, trusted asset-management industry is the transmission mechanism for all three.

Widening Investor Choice

Delegation allows Irish funds to appoint managers with genuine expertise in specific markets and asset classes: global equities and fixed income, private credit, infrastructure, emerging markets, technology and life sciences, quantitative strategies and specialist real assets. The benefit is not only access to non-EU managers; the model also lets expertise in one Member State support funds established in another, enabling the specialisation and scale a real single market requires.

The Central Bank of Ireland's 2026 delegation review recognises delegation as a core feature of the European operating model, enabling access to specialised expertise and operational efficiencies that can enhance investor outcomes.

Ireland should aim to be the best place in the world to establish and govern a fund, not insist that every element of the investment process is performed in the fund's domicile.

UCITS' export success rests on this modularity: the fund, the accountable management company, the depositary and administrator, and the investment expertise can each sit where they are best placed. Forcing portfolio management in Ireland would risk reducing choice and raising costs without creating durable European capability.

Delegation and Domestic Capability Together

Irish FMCs provide the regulated European governance platform through which international managers establish, manage and distribute UCITS and AIFs. That role has helped Ireland move beyond administration and servicing into investment and risk management, product development, distribution governance, compliance, operational resilience, technology and regulatory reporting, and a deep pool of independent-director expertise.

The lesson is that delegation and domestic substance are not alternatives. Delegation has attracted entities, activities and skilled employment to Ireland precisely while allowing funds to use investment teams elsewhere. As the CBI has recognised, delegation arrangements can provide access to specialised expertise and global investment capabilities, provided fund management companies retain ultimate responsibility, oversight and control over delegated activities.

Delegation Not Deregulation

The model only works where the FMC has genuine substance: ultimate regulatory responsibility; the ability to appoint, monitor, challenge and replace a delegate; sufficient knowledge of the strategy and its risks; timely and granular information; experienced staff and designated persons; effective risk and compliance functions; independent board judgement; and credible contingency arrangements.

The Central Bank's review recognises delegation's benefits but is clear that governance, oversight and operational risks must be managed, and that responsibility and control remain at FMC level. Its themes, substantive governance, effective challenge, appropriate resourcing and meaningful oversight, will inform the planned review of the Irish FMC framework.

Industry should own that agenda: stronger evidenced challenge of delegates; clearer service standards and escalation thresholds; management information built for decisions rather than record-keeping; proportionate local resourcing; demonstrable board understanding of strategy and risk; concentration and dependency analysis; tested exit and transition planning; and clear individual accountability for oversight.

Location quotes are not the answer

Requiring an arbitrary share of portfolio management to occur in Ireland would be a blunt proxy for substance. Location alone demonstrates nothing about decision quality, risk management, oversight, investor protection or capital allocation to Ireland. It would more likely reduce access to specialist strategies, raise costs, duplicate teams, discourage international managers from launching EU products and weaken the competitiveness of UCITS and AIFs.

An outcome-based test is stronger. Is the FMC making real decisions? Can it challenge and replace the delegate? Does it understand the strategy and risks? Does it have adequate people, systems and data? Are conflicts controlled? Are investors getting good outcomes?

Seven Pillars of an Optimal Model

• Responsibility anchored in Ireland, with authority and expertise to decide independently of the delegate.

• Expertise sourced globally, selected on capability, performance, risk management and capacity rather than location.

• Proportionate substance, reflecting nature, scale and complexity rather than fixed headcount.

• Data-led oversight, judged on the quality and use of information, not whether reports are produced.

• Effective challenge and resilience, evidenced by what changed and by tested exit plans.

• Supervisory convergence, so equivalent arrangements receive equivalent treatment across Member States.

• Irish capability-building in research, private markets, risk analytics, fund technology and data science.

Irish Priorities

Irish priorities should focus on strengthening the existing framework while preserving the factors behind the sector's success. This includes completing the FMC framework review with proportionate requirements that reflect different business models and risk profiles, while addressing weaknesses without destabilising well-governed firms. Ireland should continue moving up the value chain by investing in skills and capabilities that complement delegation. A predictable authorisation environment, greater EU convergence, and avoidance of unnecessary national duplication will remain important, alongside ensuring the tax, legal and product framework continues to support efficient investment in housing, infrastructure, SMEs, innovation and renewable energy.

Conclusion

Delegation has not prevented Ireland from developing expertise; it has been one of the mechanisms that attracted global firms, specialised employment and sophisticated governance functions here. The next phase does not require a choice between Irish substance and global expertise: a successful model needs both. Strategic autonomy should mean increasing Europe's capacity to finance its priorities, not isolating European products from international capability.

The optimal model is open but accountable, global but firmly governed in Europe, flexible but subject to strong oversight. If the SIU is to mobilise capital at the scale Europe needs, it requires an asset-management framework that is open, competitive and trusted. Well-governed delegation is part of that solution, and Ireland is well placed to prove it.

Ireland by the Numbers

Source: PwC Ireland ManCo Observatory (30 June 2025; number of UCITS ManCos and UCITS AIFMs as at 31 December 2025) and Irish Funds, Assessment of the Impact of the Funds & Asset Management Industry on the Irish Economy: Executive Summary (employment statistics, 2023). This material is provided for general information purposes only and does not constitute legal, tax, investment, accounting or regulatory advice. For further information, please contact PwC Ireland.