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.