The Cyprus Securities and Exchange Commission (CySEC) this week released its quarterly report for the fourth quarter of 2022, which highlights the current state of the collective investments sector in Cyprus.
According to the report, the number of Management Companies and Undertakings of Collective Investments (UCIs) remained stable during this time, with 333 companies being supervised by CySEC. Of these, 243 companies had operations.
The report also showed that the total assets under management (AUM) reached €9.5 billion during the fourth quarter of 2022, marking a 3.7 per cent decrease since the third quarter of the same year.
This represents a period of stabilisation since the sector experienced a much more pronounced contraction during the same time from 2021, when the total assets under management decreased by 17.7 per cent.
The commission explained that the decrease in the value of investments is primarily due to the devaluation of assets, redemptions of investment shares, and asset disposals.
Moreover, the UCIs, managed by the Management Companies, had a net asset value (NAV) of €8.9 billion. Approximately, 64 per cent of the AUM relate to assets managed by the Alternative Investment Fund Managers (AIFMs), 10 per cent by the Sub-threshold AIFMs, 16 per cent by the AIFMs and UCITS Management Companies, 9 per cent by the UCITS Management Companies and only 1 per cent by the Regulated UCIs that are managed by Foreign Fund Managers.
Approximately 84.6 per cent of UCITS Assets under Management were invested in Transferable Securities and 8.7 per cent in bank deposits, while 5.5 per cent were invested in UCITSs and UCIs.
In terms of AIFs, AIFLNPs, and RAIFs, 44.3 per cent of the Assets Under Management relate to investments in Private Equity, followed by investments in funds (10.4 per cent) and real estate investments (10.1 per cent), while the investment in Hedge Funds represents 9.8 per cent of the AUM.
What is more, there is a total of 207 UCIs with operations, comprising 80 per cent of the total AUM. 186 UCIs are domiciled in Cyprus, which breaks down to 13 UCITS, 56 AIF, 52 AIFLNP, and 65 RAIF.
Of the total 207 UCIs, 163 invest in Cyprus partially or entirely, and these investments amount to €2.2 billion, a share of 23.4 per cent of the total Assets Under Management.
Meanwhile, 69.5 per cent of the investments in Cyprus are in Private Equity, while 13.1 per cent are in real estate.
The report also showed that for UCITs, the vast majority of unitholders are retail investors (98.9 per cent), while for AIF, AIFNLP, and RAIF, 21.1 per cent of them are professional investors, 65.7 per cent are well-informed investors, and only 13.2 per cent are retail investors.
Regarding the specific sectors that UCIs invested in, during the fourth quarter of 2022, AUM in the energy sector amounted to €259.6 million, (2.72 per cent of total AUM), while €60.1 million was invested in Fintech (0.63 per cent of total AUM), €116.7 million in shipping (1.22 per cent of total AUM), and €64.4 million in Sustainable Investments (0.67 per cent of total AUM).
Overall, the report suggests that the collective investments sector in Cyprus remained stable during the fourth quarter of 2022, despite the undesirable events and unforeseen circumstances of the last couple of years, such as the Covid-19 pandemic and the war in Ukraine.
Finally, although there was a decrease in the value of investments, the sector remained robust, and the number of companies supervised by CySEC remained steady.