Creating investment funds to match investors needs and promoting Cyprus as an important gateway to Europe for Middle and Far Eastern investors could establish the jurisdiction as the Singapore of Europe, says Tony Trescothick
Could you give a brief overview of Mellstock, its core business and services?
We essentially provide institutional-quality marketing resources to small and medium size fund and investment managers at a lower cost than an in-house marketing team could. Our services include strategy, design, collateral and implementation. We believe in creating engagement and trust, which in turn can facilitate and enhance the investment process.
What are your key priorities for 2017?
Our strategy for 2017 is to support Cyprus' development as a viable and outward-looking fund centre and to improve Mellstock's brand and name awareness by creating strong working relationships with other actors in the sector that have a similar outlook to our own.
What key developments are currently affecting the financial sector?
Added regulatory costs and changes are a constant concern, but these are just part of the territory we work in. Regulatory pressures are here to stay and we have all learned to embrace the new reality. As long as it is effective and pragmatic, the industry will learn to cope. Other developments, such as the difficulties fund managers face in capital raising, need practical and real solutions – low yielding bonds and bank accounts mean investors need viable alternatives to secure their capital. Inflation is another worry, and investment managers need to design vehicles that deliver solid returns. It is important that we all embrace this new landscape, and as long as regulators make sure that what they bring in is practical, and bear in mind that not all regulatory costs can be passed on to the client, we can develop the sector further.
What opportunities do you see in Cyprus for foreign investors exploring new markets?
There are currently tremendous investment opportunities in Cyprus, especially in its strong real estate industry and with new and encouraging prospects in the energy sector. The Limassol Marina project is typical of the bold moves taken in recent times to draw visitors and investment to the island. There are several premier real estate developments underway that are testament to the nation’s improving economy. These provide a valuable signal to foreign investors that Cyprus is truly open for business.
Although still at the beginning stages of building a fund industry, what are Cyprus' key advantages and which markets should it target?
As we see it, Cyprus has a substantial advantage in its educated and flexible workforce. The human resources we have here are a key advantage, in addition to our ‘can-do’ attitude, these two form a valuable combination. Our presence in the EU Funds industry through our EFAMA membership, which is the leading European body that promotes the industry, is recognition of this. Markets-wise, we have a great opportunity with the Gulf Cooperation Council (GCC) countries and in the wider European region – especially in the field of alternative investment funds, where I feel we have good expertise. We live in a low bond yield environment and re-emerging inflationary trends, with people knowing they will lose money unless they accept some kind of risk. Rather than capital creation, the approach in the past years has been more on capital preservation, but this task has become complicated with negative rates. We can turn this around in Cyprus by offering mitigated risk products within the funds, where the risk is balanced against reward and clients can choose from real alternatives to bonds and bank deposits. This development is an opportunity to seize, particularly in alternative investments, such as infrastructure and real estate with lower risk and real returns in the vicinity of 6 to 7%.
What are your expectations for the Cyprus financial sector in the next year?
We should look to emulate other fund centres, such as Malta, and their success in offering high-quality fund structures at lower cost. I believe we have a much better proposition than most other smaller jurisdictions, as it is backed by a full-blown AIF and UCITS capability. As already mentioned, the Alternatives sector including infrastructure, real estate, private equity and other asset-backed investment classes represent a real opportunity for us. I see 2017 being a year where we will consolidate our success so far and lay the foundations for even further success going forward.
How do you see Cyprus developing in the next five years?
Going forward, the increasing emphasis on customer service is an area I can see helping us to develop as an economy. The existing links we have with Eastern Europe and Russia can be strengthened and new markets, such as the GCC countries, UAE, as well as certain African and Asia markets can be expanded and facilitate the creation of new jobs and opportunities. We are learning to look at the needs of investors and to make sure our proposition matches their needs, rather than creating funds and then searching for investors – we must examine what our potential clients need to successfully create the right propositions. There could also be some advantage in looking to emulate Singapore and Dubai, which some say has styled itself as the Singapore of the Middle East. Both are relatively small communities, but vibrant and dynamic with tremendous growth potential. There is nothing holding us back from being Europe's Singapore – as Cyprus is already an important gateway to Europe for Middle and Far Eastern investors, all of whom are within a short to moderate flying time away from our shores. Cyprus has all the factors in place to successfully and effectively compete with Malta, Jersey, Guernsey and Cayman, and I can see that already happening and accelerating between now and 2022.
Tony has a background in the investment management industry that dates back to the early 1980s in the UK. His experience in both management and marketing provides a unique insight where both elements combine to create unique and attractive investment propositions. He holds both industry and management qualifications from leading bodies such as the Chartered Insurance Institute, the Chartered Management Institute and the European Institute of Management and Finance. He is a long-term resident of Cyprus and a staunch supporter of its finance industry.