What Is An Alternative Investment Fund (AIF)
An Alternative Investment Fund (AIF) is an onshore Cyprus and European regulated investment fund that operates for the sole purpose of the collective management of its portfolio by investing in any predefined asset class and/or other liquid/illiquid instruments to the interest of its shareholders.
Depending on the size of the portfolio, the number and type of investors, and the investment strategy, AIFs are classified as follows:
- AIF with a limited number of investors (AIFLNP)
- AIF with an unlimited number of investors (AIF)
- Registered AIF (RAIF)
Each AIF (Alternative Investment Fund) is managed by a single AIFM, which shall be responsible for ensuring compliance with the AIFM Law. There are two types of managers in Cyprus:
- Authorized AIFM
- Mini-Managers
From risk management to regulatory reporting and compliance paperwork, there has been increasing pressure for AIFs and AIFMs to obtain their license and manage their operations.
Why is an AIFM required?
The AIFMD regulations, introduced in 2013, aim to enhance investor protection and increase transparency in the funds market following the financial crisis.
AIFMs play a crucial role in ensuring compliance with these regulations by performing several key functions:
- Preparing and submitting financial statements to regulators.
- Providing risk management services, which include overseeing and implementing both fund and operational risk frameworks.
- Analyzing investment restrictions and risk limits for the AIFs they manage.
- Conducting oversight and due diligence on delegates and service providers of the funds.
- Performing operational resilience assessments and business continuity planning for the funds under management.
These activities collectively add a significant level of protection for both investors and the financial market.
Who needs an AIFM?
EU and non-EU investment managers who are looking to set up and distribute AIFs to European professional investors will need an AIFM.
Any individual or entity targeting European professional investors will be subject to AIFMD regulations and will require an AIFM in place before going live with their fund, whether it is their own proprietary AIFM or a third-party AIFM.
Why AIFMs in Cyprus?
Cyprus has the tools to develop as a preferred platform for the cross border placement of Alternative Investment Funds (AIFs) to professional investors in the EU, while concurrently allowing non-EU managers
to access the European market by choosing Cyprus as their Member State of Reference and entrance point into the EU.
Once authorised in Cyprus, an AIFM is granted rights to the European “passport” allowing them to offer their services and market their AIFs cross border.
How can CX Financia help?
As a company with strategic capabilities and a fiduciary mindset, CX Financia provides an integrated solution to AIFs and AIFMs; from the establishment of the fund to CySEC licensing and operational requirements.
Our full suite of services includes:
- Consulting services
Our team of professionals will work shoulder to shoulder with you to identify the appropriate type and form of AIF and further assess your fund requirements.
- AIF License and AIFM Licence
We’ll prepare, draft, and submit your application package with all necessary documents and in line with CySEC license requirements.
- Ongoing support
In order to help you manage risks and stay up to date with all regulatory updates and announcements, we’ll provide continuous support throughout your firm’s lifecycle.
Our client base includes a diverse range of Alternative Investment Firms (AIFs) & Alternative Investment Fund Managers (AIFMs) such as hedge funds, legal entities, real estate, and private equity firms.
We can assist you in setting up your AIF and AIFM and help you manage regulatory and compliance requirements.