Andreas Yiasemides, president of the Cyprus Investment Funds Association, explains why US asset managers are showing interest in the jurisdiction.
Following the financial crisis back in 2013, one of the sectors the Cypriot government decided to develop further was that of collective investments, foreseeing that this would be an essential pillar for alternative financing and sustainable economic growth. Almost ten years later, the island has rapidly grown as an international centre for fund and asset managers. Particularly, we are observing a plethora of international investment managers and alternative investment funds (AIFs) established in the country, taking advantage of targeted incentives and utilising it as a gateway into the European Union.
The data reflected in ‘Fact Book 2022 – Trends in European Investment Fund’ of the European Funds and Asset Management Association (Efama), the leading publication for investment funds in Europe, demonstrate the dynamics and strengths of the specific sector in Cyprus. During 2021, the net assets of AIFs increased by 61.5% and reached €7.2 billion.
Data published by the Cyprus Securities and Exchange Commission indicates that the number of licensed companies rose to 322. Yet more positive is the fact that the number of companies with activities reached 235. Total assets under management reached €11.1 billion at the end of Q1 2021.
At the same time, Cyprus is evolving swiftly into a cross-border hub for investment funds, with almost 50% of net assets held by these funds, according to Efam. Considering that only Ireland, Luxembourg, and Malta concentrate higher percentages, we believe it is a remarkable achievement.
Funds invested by the investment funds in the Cypriot economy have also increased significantly. The total AuM invested in the economy at the end of 2021 amounted to €2.6 billion, up by 18% on an annual basis.
Cyprus needs to offer a prudent regulatory framework and an attractive tax regime to attract international custodians, depositories, fund managers and fund administrators in order to support further industry growth. In other words, we must continue building on the already robust ecosystem.
We are optimistic about the further development of the sector. During a recent trip to the US, we identified a growing interest in the Cyprus fund industry from some major players. We have arranged follow-up meetings in the next couple of months.
India is another huge market that has significant prospects for further cooperation since Cyprus is the eighth-largest investor in India. Our island is the closest EU member to India geographically, which places it in a prominent position in terms of direct EU market access. During a recent visit to Mumbai, fund managers from India expressed solid interest in creating a fund structure in Cyprus even during these times of uncertainty. There are still issues to resolve, but the prospects are great.
We have found our niche in the European ecosystem. As a cross-border fund centre, we continuously enhance our infrastructure to be as attractive as possible for international asset managers and other stakeholders. We have seen an increasing trend from Indian, Israeli and Japanese fund managers to establish a structure in Cyprus.
Cyprus’s cost-efficient structure is well suited for small to medium fund managers, which need to be cost-cautious, and 65% of fund managers established here belong to this category.
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