1. The Investment funds balance sheet data: assets table

The total assets outstanding at the end of March 2020, were reported at 5,563.9 million EUR. This is the first decrease in over 2 years – since the end of December 2018.  The statistics reported by the Central Bank reported a drop of -8.7% in total assets in Investment Funds in Cyprus.

The data on the number of reporting entities revalidate the trend of growth with yet another increase – the 10^th consecutive quarter-over-quarter increase. This growth trend has resulted in 189 entities at the end of March 2020 from 178 at the end of December 2019 – an increase of 6.2%. Out of these 11 new entities, 6 are RAIF (Registered Alternative Investment Funds).

Figure 1 below, combines these 2 data sets with

• the y-axis on the left and the bars along the x-axis showing the Total Assets in EUR million, outstanding,
• the y-axis on the right and the line along the x-axis showing the Number of Reporting Entities,

at the end of each period.

Figure 1 – The progress of Total Assets in EUR million (bars), outstanding at end of period and the Number of Reporting Entities (line) since end of December 2010 until end of March 2020.

2. The Investment funds balance sheet data: liabilities table

The breakdown of the liabilities on the balance sheet of Investment Funds in Cyprus is reported in 3 categories by the CBC:

1. Loans
2. IF (Investment Funds) shares/units
3. Other liabilities (incl. financial derivatives)

Most liabilities are coming from IF shares/units, a consistent theme, with 4,692.8 EUR million outstanding at the end of the period (March 2020) amounting to 84.3% of the total liabilities of Investment Funds in Cyprus. Loans follow with an increased quarter-over-quarter 696.4 EUR million outstanding (12.5%) and finally, other liabilities (incl. financial derivatives) amount to 174.8 EUR million outstanding (3.2%).

3. The Investment funds total assets/liabilities, by nature of investment table

The breakdown by nature of investment of the assets/liabilities on the balance sheet of Investment Funds in Cyprus is collected in 5 categories (Figure 2) by the CBC:

1. Equity
2. Bond
3. Mixed
4. Real Estate
5. Other

Compared to the end of the previous period (December 2020), Bonds and Real Estate recorded an increase while Equities, Mixed and Other recorded a decrease. The two smallest classes, Bond and Real Estate, reported an increase of 3.38% and 2.27% respectively. These adds to our observation that it was not all gloom and doom for hedge funds’ returns, as we reported with an article at the time.

The biggest asset class, Equity, reported the biggest decrease in both percentage terms, at -21.16%, and outstanding amount terms, -528.6 EUR million. The total outstanding, at 1,969.1 EUR million, is the lowest since the 1,697.5 EUR million reported at the end of December 2018.

Figure 2 – The progress of total assets/liabilities in EUR million (bars), outstanding at end of period broken down by nature of investment.

4. The Investment funds total assets/liabilities, by type of investment fund table

The type of investment funds is split into Open End and Closed End.

As shown in Figure 3, the decrease for Open end Investment Funds total assets/liabilities during 2019 was recorded at -518.9 million EUR, while the decrease for Closed End was -10.8 million EUR.

Figure 3 – The progress of the total assets/liabilities in EUR million (bars), outstanding at end of period broken down by type of investment fund.

5. The Investment funds total assets/liabilities, UCITS/Non-UCITS breakdown table

The final table of the Investment Funds Statistics as reported by CBC shows total assets/liabilities for both, UCITS and Non-UCITS investment funds. As reported in our previous commentary on the investment funds in Cyprus, at the end of December 2019, total assets/liabilities for UCITS amounted to 358.6 EUR million outstanding while for Non-UCITS, the total assets/liabilities were reported at 5,735 EUR million outstanding. At the end of March 2020, these have been reduced to 321.6 million EUR and 5,242.3 million EUR for UCITS and Non-UCITS respectively.

Conclusion

The Investment Funds industry in Cyprus, after a very strong 2019, has had a weaker start for 2020 in terms of total assets, yet number of reporting entities continued its increase.

The Covid-19 pandemic halted economic activity like no other event and it is forcing disruptive developments across many different business verticals. While there has been some recovery in the financial markets, there are still many unknowns and key stakeholders such as CySEC and CIFA, the Funds service providers and SALVUS, should welcome creative thinking and an optimistic attitude in facing this crisis as an opportunity. We remain committed to contributing further and aiding in this recovery.

Do not hesitate to contact us if you require further information. We will be glad to support you in finding an appropriate solution or answering your questions.

#StayAhead.

Should you be interested to read about relevant topics on the funds sector, feel free to visit our earlier articles:

• AIFMs, UCITs and the Liquidity stress Tests (LST)
• Is it all gloom and doom for hedge funds returns (YTD)?
• The Reasons AIFM, AIF and RAIF come to Cyprus
• The Cypriot AIF: legal forms, types and requirements
• The Cypriot RAIF: substance, requirements and tax
• Cyprus Investment Funds Statistics – February, 2020

The information provided in this article is for general information purposes only. You should always seek professional advice suitable to your needs.