BOSTON - Pioneering Management Corp., the mutual fund company, hopes to tap into the European Community market through a new office in Dublin. The new Irish affiliate also will provide back-office services for European shareholders.
"As a company we have decided to get into the offshore fund business, and you have to have service capacity outside the U.S. to provide the infrastructure to service shareholders, provide custody and fund pricing," said William H. Smith Jr., president of Pioneering Services Corp., an affiliate. "That is exactly what we are establishing in Dublin."
European Union laws permit mutual fund companies to offer funds throughout the 12-nation community without additional regulatory approval if they first receive the basic legal approvals in either the Republic of Ireland or Luxembourg, he said. Ireland won hands down over Luxembourg as a base for Pioneering's funds because of its plentiful, well-educated labor force and handsome tax benefits, Mr. Smith said.
"If you look at Luxembourg, you soon become acutely aware of the shortage of human resources and some funds are having problems in servicing because there are not enough people," he said.
To be sure, Luxembourg also charges mutual funds an annual tax of six basis points on their assets; Ireland has no such tax. Then too, the corporate tax rate in Luxembourg is in the 40% range, in Ireland it is only 10%, he said.
Pioneering Management (Ireland) Ltd., already has registered a deutsche mark-denominated money market fund and a global bond fund for sale in Germany, and plans to register a global equity fund. The bond fund and the equity fund also will be available to Austrian and Swiss investors.
Pioneering's Irish office has five employees and will expand to 20 by year-end.