Edinburgh-based asset manager, Baillie Gifford is on the brink of accessing the Irish pension market with the launch of its Global Balanced Fund later this month, following final approval from the Irish revenue.

The fund, which is structured as an unathorised pension fund unit trust is ceded with money from an existing Irish pension fund relationship and will be specifically targeting schemes with less than IR£5m under management, as well as charities and foundations which qualify as tax-exempt irish investing institutions.

Mirroring the asset allocation of Baillie Gifford's existing segregated Irish pension funds accounts, the fund will invest in Irish and international fixed interest and equities. Essentially it will be an asset mix which is appropriate for balanced pension fund clients," says Gareth Howlett, director at Baillie Gifford Overseas. "It is similar in many respects to the UK managed funds which are very attractive to medium to smaller pension funds to pool their assets and get high quality fund management at a reasonable cost because of the economies of scale."

Baillie Gifford will be competing head on with Ireland's insurance companies and banks which to date have dominated the market. Although the Irish market is relatively small, with approximately $25bn of pension assets, it is steadily growing in size, and demographically, Howlett believes the Irish market holds promise. "With a relatively young population compared to the rest of Europe, there will tend to be quite a good weighting towards long term equity investment management, because the funds, in terms of their maturity profile, are more skewed towards the long term return aspect." He adds: "The cash flow into the market is significantly positive."

The move by Baillie Gifford signals a growing interest from UK managers in particular, in the Irish pensions market. Traditionally, local funds have relied on local managers, which has deterred the international players, explains Deborah Reidy at William M Mercer in Dublin. "I think they felt that the Irish managers had it pretty well sewn up and there was this feeling amongst Irish pensions managers that they external_managers weren't interested," she says.

Reidy puts down the growth of interest from the international players and the willingness from local pension funds to select external managers, to Emu. Following a UK invasion, the German and French managers look next to follow, as the local managers start to gain more success themselves outside Ireland. Bank of Ireland is currently on the Mercer UK buy list, Ulster Bank has experienced some success internationally, as has Allied Irish Bank, says Reidy. "Everyone is starting to look outside their own backyard, in terms of clients, and the pension funds in terms of being receptive to foreign managers, so foreign managers have started to look here," she says. "I must have had meetings with 15 mostly UK and Scottish managers, who are sussing out the market trying to sniff it out."

Bailey Gifford is in a good position to access the market, holding a segregated CPMS record - the Irish equivalent of CAPS or WM Co - and has sustained a long-term relationship with an Irish fund which has shown a good performance. "We have a long experience of what the requirements of Irish pension fund investors are and also long experience of investing in Irish assets, both fixed interest and in equities so we know what the market wants and we know who the main players are," says Howlett.

However, Reidy warns that for other managers intending to crack Ireland, they might not find it so easy. "Some of the other managers will have a harder time, because the record they show here is a marketing record," she explains. "If you come here with an English pension fund it has a very different asset distribution. The performance of that fund is in that market, so you have got to have something that you have been doing, either to market specialist mandate services, which really haven't taken off here.""