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Anyone in experienced in opening or running a fund (ie AIFLNP) in Cyprus?

S

Schwellkopp

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Dec 20, 2022
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#1
Hi all,
I'm a EU citizen and moved to Cyprus this year. I'm interested in starting a fund to manage other people's money.
According to my own research the most cost efficient option in Cyprus seems to be an internally managed AIF LNP. I could live with the limitation of max 50 investors and like the possibility of avoiding a depositary when staying below thresholds.
What I couldn't find out is whether 3 or 4 people are required to run this type of fund. The less the better as I want to keep the costs small and most tasks in my hands.
Does anyone know how much the all-in running costs of such a fund would be (including audit, semi-annual financial reporting, etc)? Can the independent director's be part-time employees?
What would be a rough estimate for a lawyer / tax consultant support during the application process?
Thanks a lot for any input!
 
#2
Is the managing of funds for your private innercicle of people or for the public ?
 
#3
In the beginning for the private inner circle but the goal would be opening up for external investors one the track recorded has been built (currently only using my pa for investing). If it would only be for the inner circle, a regular private Cypriot Limited would do it, but I want to attract external capital too. I'm not thinking retail investors but rather family office type investors. Retail anyway wouldn't be allowed with an AIFLNP as far as I understand.
 
#4
Schwellkopp said:
In the beginning for the private inner circle but the goal would be opening up for external investors one the track recorded has been built (currently only using my pa for investing). If it would only be for the inner circle, a regular private Cypriot Limited would do it, but I want to attract external capital too. I'm not thinking retail investors but rather family office type investors. Retail anyway wouldn't be allowed with an AIFLNP as far as I understand.
Click to expand...
A RAIF could also be an option as it will cost less and be faster to get the license, however it will all depend on your investment policies etc. Happy to send you a PM to discuss.
 
#9
You really don't want to do that, the markets will not allow public money to be traded via fiat funds at high return numbers, for those numbers it's wild west crypto, Cyprus does not have a good reputation so comes down to investor location, a true fund will cost $10,000s in setup costs and similar in maintenance, even the prospectus costs $30k because I had to work on them, the numbers have to be validated by some very expensive consultants, you generally can't just use a normal company to run other peoples money, Cyprus has it's own fidicuary rules just like most jurisdictions.

I'm in the middle of training people to use a closed architecture which is sponsored and includes all the prospectus costs, they are not allowed to go above 100%pa for family office (direct family) and not above 50%pa for friends and family, with public investors if you push beyond 20%pa you will have unlimited problems, mainly because those people would be lucky to get 5%pa and 10%pa degrading the fund performance due to their insatiable appetite for drama.
 
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#11
@JC1984 what returns have your actually achieved? What's your aum?

@alistera , that's a lot of words but je comprends pas
When you're stating percent pa, is that percent return per annum?

Why is it "not allowed"?
If I was running a $1M on my personal account, what could I do to distant myself from the funds?

... I always think a regular firm would be better than starting a fund. For starters, most of my margin goes for options; so not sure if friends and family could ride along if they aren't "accredited" investors

A regular firm could become an asset management firm like senvest capital
 
#12
nasdaqtradfiguy said:
@JC1984 what returns have your actually achieved? What's your aum?

@alistera , that's a lot of words but je comprends pas
When you're stating percent pa, is that percent return per annum?

Why is it "not allowed"?
If I was running a $1M on my personal account, what could I do to distant myself from the funds?

... I always think a regular firm would be better than starting a fund. For starters, most of my margin goes for options; so not sure if friends and family could ride along if they aren't "accredited" investors

A regular firm could become an asset management firm like senvest capital
Click to expand...
Correct, percent return per annum, the real reason LTCM went under, yes they over leveraged, but they were providing 40%pa to accredited investors, that's a no no in the financial markets, people like Renaissance also produce 40%pa but they are closed employee funds, friends and family basically.

As an individual trader you can target 150-200%pa, very few can do this as you need access to institutional fintech, knowledge and experoence making the target for most at 15-20%pa, under that you've failed, obviously with $1mil you wouldn't want such high numbers and would go for 15-20% or 30-50%, but you can also achieve the same by deploying $100,000 at 200%pa or $250,000 at 200%pa, which generates $200,000 or $500,000 returns while keeping the residual capital in gold or tips, it's a nicer way to live.

There are a lot of 'soft controls' in the financial markets you will rarely see until you trigger them which look like one off events, they're not, also some fund structures can have limited numbers of non-accredited investors.
 
#13
You're saying ... very few can have access to institutional fintech, hence, unable to generate those kind of returns

I thought the only difference between retail fintech and institutional fintech is that the latter could walk away with your money after claiming a cyber-attack/breach

So, for a year like 2023, would you tell us your approx returns, what kind of bets/products you used, and if you want to add extra value, ending balance?

Or by fintech are you referring to financial technology such as a portfolio margin account with IBKR?
 
#14
nasdaqtradfiguy said:
You're saying ... very few can have access to institutional fintech, hence, unable to generate those kind of returns

I thought the only difference between retail fintech and institutional fintech is that the latter could walk away with your money after claiming a cyber-attack/breach

So, for a year like 2023, would you tell us your approx returns, what kind of bets/products you used, and if you want to add extra value, ending balance?

Or by fintech are you referring to financial technology such as a portfolio margin account with IBKR?
Click to expand...
Some people can make those returns, but never consistently to build a portfolio and never managing third party capital, retail don't have the numbers to make it work even with access to technology and architecture, anyway I don't need to provide details, I have no need to manage other peoples money.

You are missing the point, starting a fund takes one year to setup, the prospectus alone costs $10,000s, setup and maintenance costs are often $100,000 plus, they need to incubate the fund (I was generating 50% per quarter for a small $10mil fund to kick start it) before it reverted back to 50% per year (friends and family), they need to have a trading architecture or buy one in, and if they bypass the numbers the fund will either never get off the ground or unravel at the first drama, investor, market, broker, trading, doesn't matter.

People wanted to know if they can start a fund, sure, even if they started it via an limited company and got it off the ground, once it gains traction limitations will be introduced by third parties, this is just how it works, unless they find a company to sponsor 80-95% of the costs (a few exist), and as for the number of people to run the fund, the benchmark is $1million revenue per employee so on 2&20 (which no one uses any more) via $10mil AUM which is $600k fees then yes you can run it with one person, most single manager funds are $3mil to $5mil AUM, but not less that $2mil, it only generates $120k fees and you might as well go back to your day job.
 
#15
nasdaqtradfiguy said:
@JC1984 what returns have your actually achieved? What's your aum?

@alistera , that's a lot of words but je comprends pas
When you're stating percent pa, is that percent return per annum?

Why is it "not allowed"?
If I was running a $1M on my personal account, what could I do to distant myself from the funds?

... I always think a regular firm would be better than starting a fund. For starters, most of my margin goes for options; so not sure if friends and family could ride along if they aren't "accredited" investors

A regular firm could become an asset management firm like senvest capital
Click to expand...
Starting with 150k in 2019, I'm now just over 2M.
 
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