Cyprus has firmly established itself as one of Europe’s fastest-growing investment fund jurisdictions, with total assets under management reaching €10.7 billion at the end of the first quarter of 2025. Over the past decade, the country has evolved from a niche market into a sophisticated funds domicile of choice, attracting Alternative Investment Fund Managers (AIFMs) and UCITS Management Companies from across Europe, Asia, and the Middle East.

Backed by a robust EU-aligned legislative framework and proactive supervision by the Cyprus Securities and Exchange Commission (CySEC), Cyprus continues to strengthen its reputation for transparency, investor protection, and operational efficiency. The recent Investment Fund Administrators Law, approved in 2025, marks a key milestone with fund administration now recognised as a regulated activity requiring a dedicated CySEC licence. This move has further elevated the jurisdiction’s global standing, with administrators now subject to oversight, capital adequacy, internal control systems, and AML obligations.

This transformation has been driven by a maturing professional ecosystem of law firms, fund administrators, and audit specialists, offering end-to-end expertise in fund structuring, licensing, and compliance. With over 320 entities under CySEC supervision, including collective investment schemes and fund managers, the sector’s steady expansion underscores Cyprus’ growing importance as a cross-border investment hub bridging European capital and global markets.

Even amid geopolitical shifts and inflationary pressures, the Cypriot fund sector has demonstrated exceptional resilience and agility, supported by competitive costs, fast-track licensing, and a responsive regulatory environment. These advantages have not only attracted an increasing number of fund managers relocating to the island but also fostered greater diversity in fund types and investment strategies – spanning private equity, real estate, maritime, renewable energy, and fintech-driven funds.

As Cyprus strengthens its foothold in sustainable and tech-enabled finance, its ambition is clear: to become a top-tier European fund domicile, offering investors a stable, innovative, and globally connected platform for growth.

Gateway for Global Capital

Cyprus has cemented its role as a cross-border gateway for global fund flows, connecting European investors with opportunities in Asia, the Middle East, and Africa. Its combination of regulatory excellence and strategic geography continues to attract both fund structures and international asset managers seeking a reliable EU base with global reach.

As of the first quarter of 2025, total assets under management stood at €10.7 billion, up from €2.7 billion in 2016 – a nearly fourfold increase in less than a decade. Today, more than half of those assets are held by international investors, positioning Cyprus alongside established fund centres such as Ireland, Luxembourg, and Malta. This growing global confidence is also reflected in the diversity of structures being launched on the island. Fund managers from India, Israel, Japan, and the UK are choosing Cyprus as their European domicile of choice – drawn by the island’s flexible frameworks for Alternative Investment Funds (AIFs) and its proven expertise in fund administration.

Investment funds are also playing a pivotal role in the domestic economy, contributing an estimated €2.9 billion to Cyprus’ GDP through targeted investments in shipping, renewable energy, healthcare, education, technology, and real estate. Considering that Cyprus’ annual GDP is just over €30 billion, this is no small achievement. Through investment funds, Cyprus is gaining wider access to a more diverse capital pool that includes institutional investors, pension funds, sovereign wealth funds, and high-net-worth individuals. These capital inflows have helped foster innovation and support sustainable growth, turning Cyprus into not just a funds jurisdiction, but a catalyst for long-term economic development.

Cost Efficiency and Operational Excellence

One of Cyprus’ defining strengths as a fund domicile is its ability to offer world-class quality at a competitive cost. For fund managers seeking efficient European market entry without the expense of larger jurisdictions, Cyprus provides a compelling value proposition: streamlined regulation, deep professional expertise, and cost efficiency across the entire fund lifecycle – from setup to ongoing administration.

Cyprus’ comprehensive ecosystem of legal, accounting, banking, and administrative service providers ensures that every stage of the fund management process – from licensing and structuring, to reporting, and compliance – is handled with precision and speed. Collaboration between CySEC, professional associations, and industry practitioners allows for fast-track authorisation procedures, ensuring time-to-market advantages that few competing EU jurisdictions can match. In addition, with international fund platforms such as Clearstream’s Vestima, Refinitiv, and Bloomberg listing Cyprus-domiciled funds, global visibility and accessibility have never been higher.

For small to mid-sized fund managers, who make up roughly 65% of all managers established in Cyprus, this cost-quality balance is particularly attractive – making it a strategic choice for managers seeking both scalability and EU passporting rights within a stable environment based on English Common Law.

The recent approval of the Investment Fund Administrators Law in 2025 further enhances the jurisdiction’s operational appeal. This landmark legislation establishes clear supervisory standards for fund administrators, strengthening investor confidence and ensuring consistent service quality across the sector. Combined with Cyprus’ robust double tax treaty network covering 69 countries, its competitive tax regime, and business-friendly environment, the island stands out as a pragmatic choice for fund promoters and investors alike.

AIFs and UCITS

Cyprus has firmly positioned itself as a specialist centre for Alternative Investment Funds (AIFs), offering sophisticated structures that meet the needs of global asset managers, family offices, and institutional investors. While the jurisdiction also supports UCITS – including funds promoted by international names such as JP Morgan, Schroder, Pictet, and Julius Baer – its strength lies in alternative fund innovation, where flexibility and customisation are key.

As one of the first EU member states to transpose the Alternative Investment Fund Managers Directive (AIFMD) into national law, Cyprus offers a robust and transparent legal framework for all fund types. This legislative foresight has allowed the jurisdiction to cultivate a thriving AIF ecosystem that continues to expand in both diversity and sophistication.

The Registered Alternative Investment Fund (RAIF) has become one of Cyprus’ most successful fund vehicles. Modelled on Luxembourg’s popular Reserved Alternative Investment Fund, the RAIF combines speed and efficiency: it requires no separate licensing requirement from CySEC, registration is processed within a matter of weeks, and supervision is through an authorised AIFM. Since its introduction in 2018, the number of RAIFs has grown dramatically, from just 26 in 2020 to 145 by the first quarter of 2025, reflecting international demand for streamlined, institutional-grade fund structures.

Recent success stories, such as the establishment of MUFG Investor Services – a division of Mitsubishi UFJ Financial Group (MUFG) which is one of the world’s largest financial institutions with approximately $3 trillion in assets – underscores the jurisdiction’s growing appeal to global institutions. In addition, the 2025 announcement of Deutsche Bank also eyeing a return to Cyprus as a US dollar correspondent bank, signifies confidence in the country’s improved financial sector. This return is expected to boost the number of international currency transfer options available to Cypriot banks, potentially strengthening the overall financial infrastructure also for investment funds and other businesses operations.

Expanding Horizons and Global Reach

The Cypriot investment fund industry has evolved into a diverse ecosystem, accommodating a broad spectrum of fund types, strategies, and investor profiles. From regional start-ups and niche alternative funds to established international managers seeking EU access, Cyprus offers tailored solutions for every scale of operation.

Fund sizes in Cyprus vary widely – from smaller funds of around €10 million to institutional vehicles exceeding €1 billion in assets – reflecting the jurisdiction’s flexibility and appeal to both boutique managers and large-scale investors. However, medium-sized funds continue to dominate the market, a testament to Cyprus’ suitability for firms seeking scalable operations within a well-regulated environment.

As the industry matures, the island’s fund cluster has become increasingly international in scope. Asian, African, and Middle Eastern fund managers are establishing structures in Cyprus to gain passportable EU access, while UK-based managers continue to use Cyprus as a post-Brexit bridge into the single market. This global diversification underscores the island’s growing role as a conduit for cross-border capital, linking investors and opportunities across continents.

Cyprus has also seen the rise of third-party management companies and fund platforms, offering ‘plug-and-play’ solutions to international promoters. These platforms provide a fully compliant UCITS/AIFM entity with European marketing rights, enabling managers to enter the EU market without setting up their own local substance. Structured as umbrella funds, they deliver operational efficiency, which is a key advantage for managers prioritising speed and compliance in competitive markets.

The evolution of Cyprus’ fund landscape reflects more than just growth; it signals a strategic broadening of scope. The jurisdiction’s ability to serve alternative, private equity, and specialised sector funds, while attracting managers from emerging markets, has positioned it as a multifaceted fund centre with growing international credibility.

Evolving Regulation and Strong Oversight

 Cyprus continues to refine its legislative and regulatory framework to ensure that the investment fund sector remains globally competitive, innovation-driven, and sustainability-aligned. Over recent years, the jurisdiction has introduced targeted reforms that enhance both market integrity and forward-looking governance, under the supervision of CySEC.

A major milestone was the Investment Fund Administrators Law, enacted in 2025, which for the first time establishes a dedicated supervisory regime for all fund administrators operating in Cyprus. This landmark legislation strengthens transparency, standardises operational requirements, and ensures consistent quality across the industry – a move that has been widely welcomed by both fund managers and investors.

In parallel, Cyprus continues to deepen its commitment to sustainable finance. The jurisdiction is actively implementing the EU Sustainable Finance Disclosure Regulation (SFDR) and EU Taxonomy Regulation, ensuring that fund managers disclose environmental, social, and governance (ESG) metrics in line with European best practice. CySEC has issued guidance on integrating ESG factors into risk management and reporting, positioning Cyprus as a future-focused financial centre aligning capital flows with long-term environmental and social priorities.

The Mini Manager regime, finalised in 2020, continues to attract managers who seek an economical structure under the Alternative Investment Fund Managers Directive (AIFMD). The regime has proven particularly attractive to boutique and first-time managers seeking to establish a presence in the EU with minimal operational overhead.

Meanwhile, CySEC is accelerating its digital transformation, investing in advanced supervisory technologies. This ongoing modernisation reflects Cyprus’ broader ambition to build a tech-enabled and transparent regulatory ecosystem that supports innovation without compromising investor protection. By combining strong governance, digital readiness, and sustainability alignment, Cyprus has created a regulatory framework that is not only robust and transparent but also responsive to the evolving priorities of global capital markets.

A Platform for Global Growth

Cyprus’ ascent as a dynamic European funds jurisdiction is built on a foundation of credibility and quality. The island’s combination of robust regulation, professional expertise, and attractive operating conditions continues to draw international asset managers and investors seeking both security and scalability.

Continuous investment in digital systems, skilled personnel, and open dialogue with the industry ensures that the regulatory environment remains efficient, responsive, and aligned with global best practice.

Cyprus’ cost advantage remains a defining factor in its appeal. This balance has made the country particularly attractive to small and mid-sized managers, who find in the island a jurisdiction that combines value with substance – a rare blend in the European landscape.

Equally compelling is Cyprus’ fiscal and legal environment. The jurisdiction offers one of Europe’s most favourable tax regimes for funds, fund managers, and investors alike. Cyprus’ legal system based on Common Law provides predictability, while its stable political and macroeconomic environment reinforces its reputation as a safe and strategic choice for long-term investment.

Complementing its regulatory and tax advantages, Cyprus has cultivated a world-class professional services sector. The island hosts a concentration of recognised fund administrators, auditors, legal advisors, custodians, and depositaries – including the Big Four accounting firms, smaller specialised boutique firms, and several leading international law practices. Global service standards are now the norm across Cyprus’ fund sector and fund managers can access all the resources they need to launch and operate efficiently within the EU.

The Cyprus Investment Funds Association (CIFA) also plays an important role in maintaining this momentum. As the collective voice of the industry, CIFA actively collaborates with CySEC, the government, and international organisations to ensure continuous improvement and global visibility.

With its geostrategic location, Cyprus offers investors and fund managers an unrivalled gateway to regional and global markets. The jurisdiction’s evolution from a niche alternative funds centre to a fully-fledged European hub showcases how adaptability, professionalism, and innovation can converge to create long-term success.

As the global funds industry enters a new era defined by technology, sustainability, and cross-border capital flows, Cyprus stands ready to meet the moment. Its proven regulatory integrity, efficient operating model, and deep talent pool make it a jurisdiction where international managers can not only establish funds but scale them – efficiently, securely, and with confidence.

Read the 2025-2026 CIFA Investment Funds Guide

November 2025