Cyprus investment fund sector booms during pandemic

The Cyprus Investment Funds Association (CIFA) announced on Monday that the investment fund sector enjoyed significant growth during 2021, with the total amount of Assets under Management (AuM) increasing by 48.7 per cent despite the adverse effects of the pandemic.

“The sector is now established as one of the most promising of the Cypriot economy and one of the fastest-growing at a European level,” CIFA said in a statement, adding that it wishes to express its “satisfaction with the sector’s course and believes that its upward but sustainable growth will continue in 2022”.

The association stated that it will continue with its ongoing strategic, objective-oriented promotion plan.

According to a recent report by the Cyprus Securities and Exchange Commission (CySEC), Assets under Management of Cypriot funds reached €11.6 billion at the end of the third quarter of 2021, a year-on-year increase of 48.7 per cent.

Moreover, CySEC added that it currently supervises 298 Management Companies and Undertakings of Collective Investments (UCIs), a 9.1 per cent increase year-on-year.

“The country’s recognisability is now clear from the very investment organisations that choose Cyprus as their base,” CIFA said, adding that “in recent years, dozens of fund managers, from various geographical areas, have chosen Cyprus recognizing the remarkable advantages it offers as a destination”.

CIFA explained that the legislative and tax framework that governs Collective Investments in Cyprus is comparable to other European investment destinations, while the cost of establishing and operating these organisations is noticeably lower.

“It consists of no coincidence that, according to data from the European Fund and Asset Management Association (EFAMA), 47 per cent of the Cypriot Investment Funds net assets were related to cross-border investments in 2020,” CIFA said.

“This ranks Cyprus fourth in Europe, with Ireland, Luxembourg, and Malta as the only European countries ahead,” the association added.

In terms of how the investment fund sector contributes to the Cypriot economy, CIFA said that roughly 140 collective investment organisations invest in Cyprus, in part or fully, with the full amount reaching €2.3 billion at the end of the third quarter of 2021, explaining that this represents 19.5 per cent of the total amount of Assets under Management.

“What the professionals of the sector are eager to see materialising in the new year, is the enactment of the legislation that will govern the supervision and regulation of the fund administration services profession,” the association said, stressing that this development will complete the legal framework of the sector, providing an additional level of security to both investors and the managers themselves.

The association does note, however, that due to the dynamic nature of the sector, both in Cyprus and internationally, the situation is continuously monitored, with new proposals being made where deemed necessary.

“During the new year ahead, we will continue our targeted actions to extend the promotion of the sector abroad, in specific markets which present concrete prospects,” CIFA president Andreas Yiasemides said.

“The Cypriot Investment Funds’ assets have already approached €12 billion, under adverse conditions, and this makes us very confident that with correct and stable steps we will achieve the medium-term goal we have set: to raise the assets of the funds in Cyprus to €25 billion,” he added.

“Furthermore, it satisfies us to note that so many managers from abroad choose Cyprus as the basis for their operations and we hope that in 2022 there will be additional and significant developments in relation to international organisations that provide services to Investment Funds,” the CIFA president concluded.