Investment Funds new pillar of Cypriot economy

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Despite the challenges, 2021 was another successful year for the Investment Funds sector in Cyprus; total Assets Under Management (AUM) reached €11.6 bln from €8.6 bln, an annual increase of 34.8%.

The data published by the Cyprus Securities and Exchange Commission (CySEC) indicate a significant but steady increase in the sector’s size.

Regulated Management Companies and Undertakings of Collective Investments, in the fourth quarter of 2021, for the first time exceeded 300, reaching 310 of which 224 already have activities.

A year earlier, the number of licensed companies was 283, of which 197 had activities.

The funds invested by the Investment Funds in the Cypriot economy have also increased significantly.

The total AUM invested in Cyprus at the end of 2021 was €2.6 bln, an 18% annual rise.

The Cyprus Investment Funds Association (CIFA) believes that the growth observed in recent years, even during the pandemic and high uncertainty, established the Investment Fund sector among the fastest growing in the economy.

CIFA said it would continue to “submit suggestions and proposals for the continuous modernisation of the legal and tax framework governing Collective Investments”.

“Under these conditions, Cyprus can compete equally with other European destinations and continue to attract Funds and Administrators worldwide.”

The value of Total Assets under Management reached €11.6 bln in Q4 2021, recording a minor decrease of 0.2% compared to Q3 2021.

And the UCIs, managed by the Management Companies, had a Net Asset Value (NAV) of €9.8 bln.

Referring to the investment policy of UCITS, CySEC said they invest heavily in Transferable Securities (85.6%), followed by investments in bank deposits (6.6%) and investments in UCITSs and UCIs (6.5%).

On the other hand, AIFs, AIFLNPs and RAIFs invest mainly in Private Equity (38.9%), while the investment in Hedge Funds represents 15.6% of the AUM.

Regarding the specific sectors that UCIs invested in, during Q4 2021, AUM in the Energy sector totalled €309.4 mln (2.67% of total AUM), while €30.4 mln was invested in Fintech (0.26% of total AUM), €110.3 mln in Shipping (0.95%), €46.9m.