Cyprus has been highlighted as one of the fastest-growing investment fund industries in the European Union at the Undertakings for the Collective Investment in Transferable Securities and Alternative Investment Fund Managers Directive (UCITS & AIFMD) London Conference 2021.
Dr. George Theocharides, the newly-appointed Chair of the Cyprus Securities and Exchange Commission (CySEC), and Andreas Yiasemides, Chair of the Cyprus Investment Funds Association (CIFA) took part in a panel discussion on September 28 hosted by George Campanellas, CEO of Invest Cyprus, to highlight the key benefits of Cyprus funds.
In recent years, net asset growth in Cyprus has outpaced asset growth in Europe and southern Europe, with a 396% increase of total assets under management from 2016 to 2019, according to CySEC figures.
Campanellas said: “Even during the pandemic, the Cyprus funds industry saw rapid growth. A recent study showed assets under management now exceeds €10.7 billion, which is remarkable considering this is a relatively new sector for Cyprus, and shows that it is being recognized by the global asset management and investor community.”
Yiasemides said the geographical position of Cyprus at the crossroads of Asia, the Middle East and Europe, low set-up costs and tax incentives specifically developed for companies relocating to Cyprus were among the key drivers of the industry’s growth. Although Cyprus hosts some UCITS business, it is strategically positioning itself as a home for specialized alternative funds in sectors where it already has a strong presence, such as shipping, energy, and real estate.
“At CIFA, we have witnessed a new trend towards private equity funds being established in Cyprus,” Yiasemides said, noting that “cross border funds are also thriving. While Luxembourg and Ireland dominate Europe’s cross-border fund market, Cyprus is successfully competing for business. According to the EFAMA (European Fund and Asset Management Association), Cyprus saw the highest Net Asset Value growth rate at a pan-European level in all fund categories during the fourth quarter of 2019.”
In attracting new fund professionals to the island, new target markets for Cyprus include Asia, particularly India, China and Israel, and the Middle East, but the impact of Brexit is also driving interest from the UK, added Yiasemides.
Finding new ways of investment will be crucial as Cyprus pursued a balanced economic recovery, post-COVID, said Dr. Theocharides. CySEC supervises more than 200 companies, including collective investment schemes and fund managers, and had significantly enhanced its regulatory framework for the sector. Among additional changes that are underway, he said that CySEC is keen to develop a regulatory sandbox in Cyprus.
“Considering the rapid developments around financial and regulatory technology, I think that it is not an exaggeration to say that we might be witnessing the beginning of a new revolution in the financial markets. Currently, we are looking into the possibility of transforming the CySEC Innovation Hub into a regulatory sandbox, which will allow innovative products or services to be tested in a controlled environment,” Theocharides said.
During the two-day conference, which ended September 29, senior regulatory experts, legal representatives, CEOs and investors discussed the ways in which to navigate the evolving European fund distribution landscape with successful regulatory, operational, and investment strategies. Invest Cyprus is an associate sponsor of the conference.
More information about the UCITS & AIFMD Conference can be found online: https://informaconnect.com/ucits-and-aifmd-london-conference/.
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