2020 Cyprus Country Report

Investment Funds
Sector Profile
READY FOR
BOLD
MOVES
Armed with a fully upgraded and modernised regulatory framework,
Cyprus is ready to compete for big fund business in the alternative
investment space even during the most unstable of times.
Cyprus’ investment funds industry is
dusting off its newcomer status as increasing
numbers of medium-sized
funds and top-tier fund managers
decide to locate to the island. Assets
under management (AuM) have increased
by 200% from €2.7 billion in
2016 to €8.3 billion in 2019, showing that it is
not the sector’s size but its fast growth that has
impressed, and is being recognised by, the global
asset management and investor community.
Although Cyprus has snatched up some
UCITS business, it looks to specialise in the
structuring of alternative assets in sectors where it
already has a strong global presence such as shipping,
energy, real estate and wealth management.
The island’s cost-effectiveness, its flexible and recently
updated legislation, as well as its proximity
to the Middle East and Africa, and longstanding
preferential access to Eastern Europe, post-Soviet
states and Russia, are some of the key reasons
why market players started turning to the island.
In the short to medium-term future, it appears
the sector will not be able to retain its previous
performance level as the Covid-19 pandemic
has presented it with a new level of challenge.
Globally, the novel coronavirus has halted economic
activity like no other event, and markets
are only gradually reopening. While the pandemic
will certainly be a test of Cyprus’ resolve
and ambition, the outlook for the longer term
remains positive as many believe the sector has
not even begun to realise its full potential.
LATE ON THE SCENE
To understand where Cyprus stands today, it’s
important to chart the last few years of the country’s
evolution. Although the Cypriot investment
funds sector dates back to the late 1990s, the
country only saw substantial inflows in the past
few years. Following the 2013 financial crisis,
Cyprus sought to create new opportunities for investors
by transforming a debt-driven economy
into an investment-driven one – and the investment
funds sector was identified as an economic
driver of the future.
Although Cyprus arrived somewhat late to the
party, it gained considerable ground after government
and industry began an extensive outreach
campaign to attract funds-related business. The
country updated and modernised its regulatory
framework to bring it on par with those of other
European fund domiciles and brought in new
procedures and products designed to speed up
time-to-market.
KEY
contacts
Cyprus Securities
and Exchange
Commission (CySEC)
www.cysec.gov.cy
Cyprus Investment Funds
Association (CIFA)
www.cifacyprus.org
108 Country Report CYPRUS 2020