Hello, I'm Nick Fitzpatrick, the editor of Funds Europe Magazine, and I'm speaking today with Cuan Coulter, Global Head of Asset Management Segment and UK Country Head at State Street. Welcome, Cuan.

Hi Nick. So Cuan, I imagine you spend quite a lot of your time on planes through either Ireland and Luxembourg, obviously the two main fund domiciles in Europe. What are you finding when asset managers, for example US asset managers, want or think about, what's their criteria for how they choose a fund domicile?

Yeah, well, that's a fair assumption. I, um, I think of both markets as growing markets. Um, both of them have benefited from kind of global expansion in the funds industry.

I think the criteria that managers use when they make that decision tends to gravitate towards softer cultural aspects rather than kind of hard regulatory or, or sort of tax, um, considerations.

A lot of it has to do with like the cultural affinity of the firms, the history of the firms, potentially where their service providers already have footprints. Um, but both markets are benefiting from growth.

Yeah, both markets have very successful individual fund structures. You know, the Irish ICAV, the Luxembourg RAIF, in your experience, are either of these structures better suited to a particular type of investment or a particular type of distribution strategy?

So I think this is a slight oversimplification because both markets have lots of diversity in what they can offer. Um, but if you were to try to, um, sort of put a pith around, um, the individual characteristics of the markets, I'd say Ireland has tended to benefit from, uh, kind of index or passive funds and has developed a sort of specialism in ETFs, if you will. Whereas in Luxembourg, traditionally they've been favoured by active managers and of late, private funds, um, or private market funds, um, seem to sort of gravitate towards the Luxembourg market. As I said, it's a little bit of a simplification, but that's how I'd characterize the two markets.

So you domicile your fund, you begin to market, you begin to operate it, it creates a tremendous amount of data. Now we all know, everybody knows that asset managers have a big problem managing data. Why is that do you think?

So part of it is because of the fact that the investment process or investment thesis have become more sophisticated. I think asset managers have always been large consumers of data, but as you've gotten out of sort of core traditional financial measures, you're starting to acquire lots and lots of unstructured data. Once you acquire unstructured data and once you have to synthesize that unstructured data, your sort of job becomes much more complicated. Um, and so we're seeing a lot of asset managers spending, um, inordinate amounts of time consuming data, aggregating that data, synthesizing that data, and then using it in their decision-making processes. Data is a sort of a big revolution in the asset management industry.

And I know you think AI's got a role to play in all this. Can you tell us about that?

Sure. I mean, most of our clients in one way, shape or form are, uh, either dabbling in it or, or putting into place, fairly, um, serious proof of concepts. I think back to the point about, you know, being able to consume large amounts of unstructured data and being able to synthesize decisions out of that, AI and some of the large language models that are being used are tools that are particularly adept at that, in many ways, more adept than humans are. And so I think you see asset managers delving into this, into these new technologies because they see how critical it might be to their future decision-making prowess.

Is take-up significant so far? I mean, I imagine people, you know, we all know people are also worried about this, both in business and or in just the private sphere. How would you describe take-up so far? Yeah, you say something dabbling in it, but you know, is take-up earnest?

So I think we, we've yet to see, um, sort of a full industrial scale application of it. Some of that is because of like regulatory uncertainty and um, frankly a little bit of lack of clarity around, you know, at what point does the portfolio manager get replaced by a machine. Um, but that said, I, I don't have one client who isn't in one way, shape or form, sort of investigating the technologies. Um, several have proof of concepts underway.

Great. Well, I think it's something we've probably all got to get used to, isn't it?

So Cuan Coulter of State Street, thank you for joining us today. Thank you, Nick.