Salvus Reports on Cyprus Investment Funds

SALVUS Funds, as key provider of fund services in Cyprus, have summarized the Statistics Department of the Central Bank of Cyprus (CBC) data release of May 2020 for Investment Funds based in Cyprus. The reporting frequency is quarterly, and the current data set period includes data until the end of March 2020. This set of data captures a good part of the COVID-19 impact, which saw global markets crash within February and partly recovering within March.

Salvus Reports on Cyprus Investment Funds
Limassol, Cyprus, June 08, 2020 --( SALVUS Funds have summarized the impact of the COVID-19 lockdown on the state of the Cyprus Investment Funds and to the company itself, a key stakeholder in the growth of the sector in Cyprus. The summary reports 5 areas and highlights the key findings for SALVUS Funds or the industry as a whole.

The total assets outstanding at the end of March 2020 for Investment Funds in Cyprus, 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 re-validate the trend of growth with yet another increase - the 10th 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%. For SALVUS, out of these 11 new entities, 6 are RAIF (Registered Alternative Investment Funds).

The breakdown of the liabilities on the balance sheet of Investment Funds in Cyprus is reported in 3 categories by the CBC: Loans, Investment Funds (IF) shares/units and 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%).

The breakdown by nature of investment of the assets/liabilities on the balance sheet of Investment Funds in Cyprus is collected in 5 categories by the CBC: Equity, Bond, Mixed, Real Estate and Other. SALVUS notes that 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 and SALVUS Funds, as reported 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.

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

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 a 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.

SALVUS Funds and the Investment Funds industry in Cyprus, have had a weak start for 2020 after a very strong 2019. This is in terms of total assets, nonetheless the 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, welcome creative thinking and an optimistic attitude in facing this crisis as an opportunity, and remain committed to contributing further in aiding this recovery.
Salvus Funds
Nikolas Xenofontos