Cyprus’s
investment fund industry demonstrated a visible contraction in the third
quarter of 2024, with assets under management (AUM) reaching €9.1 billion and the
number of regulated entities falling to 323, according to data released by the
Cyprus Securities and Exchange Commission (CySEC).
Cyprus Investment Fund
Sector Shows Mixed Signals
The
Mediterranean financial hub saw its total AUM increase by 6.08% year-over-year,
even as it recorded a modest 2.43% decline from
the previous quarter. The number of regulated entities dropped to 323 from
335 a year earlier, reflecting ongoing industry consolidation.
Private
equity continues to be the preferred investment strategy among Alternative
Investment Funds (AIFs), representing 33.1% of total AUM. Real estate
investments account for 12.7%, while hedge funds and fund-of-funds strategies
comprise 9.8% and 9.2%, respectively.
The
investor base shows distinct patterns across fund types. While retail investors
dominate UCITS funds at 99.1%, alternative investment vehicles primarily cater
to well-informed investors (67.9%) and professional investors (19.5%).
The data
reveals a strong domestic focus, with 199 Cyprus-domiciled funds controlling
75.2% of the total AUM. Notably, 166 funds have allocated investments within
Cyprus, totaling €2.6 billion, with private equity and real estate sectors
capturing the majority of domestic investments.
Shipping
and energy sectors have emerged as significant investment targets, with
allocations of €722.1 million and €505.9 million respectively. The fintech
sector attracted €254 million, while sustainable investments, though growing,
remained modest at €85.9 million.
CySEC 2024 Stats
CySEC
recently released updated statistics, reporting that it currently oversees 834
financial institutions, with an additional 60 awaiting authorization across
various sectors.
The
regulator is preparing for significant regulatory changes as the Digital
Operational Resilience Act (DORA) and Markets in Crypto-Assets (MiCA)
regulations take effect. These frameworks will reshape the digital finance
landscape across the European Union, introducing stricter compliance standards.
In
enforcement actions, CySEC has imposed €7.9 million in administrative fines
over the past three years, emphasizing compliance and investor protection. The
regulator has also focused on financial literacy, launching online resources
and awareness campaigns to educate investors.
CySEC Chairman
George Theocharides highlighted ongoing legislative developments at the
European level aimed at strengthening the regulatory framework for investment
services. The commission’s 2025 budget is set at €17.5 million, primarily
allocated to staff salaries and technological upgrades. Revenue is expected to
rise from 2026, following the introduction of a revised pricing model for
supervised entities.
This article was written by Damian Chmiel at www.financemagnates.com.
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