Singapore Continues to Grow as Asia Pacific Gateway: MAS

As of mid-September, 120 VCCs have registered in Singapore, on top of 15.7% year-on-year growth in total AUM recorded at the end of 2019. 

MAS (Monetary Authority of Singapore) has revealed that 120 VCCs (Variable Capital Companies) have been incorporated with ACRA (Accounting and Corporate Regulatory Authority) in the eight months since the launch of the new framework.

The VCC framework was launched in January, providing a new corporate structure that can be used for a wide range of investment funds and provides fund managers greater operational flexibility and cost savings.

The framework was designed to attract more fund managers to domicile in Singapore and enhance its value as an international fund management centre. MAS has introduced a VCC Grant Scheme, valid until 15 January 2023, to co-fund up to 70 percent of qualifying expenses relating to the set-up of the VCC.

According to the latest annual survey of asset managers published by MAS, funds in Singapore saw assets under management reach a total of about SGD 4 trillion in 2019, representing growth of 15.7 percent year-over-year, which far exceeds the 5.4 percent increase seen in the previous survey.

MAS says growth was broad-based across traditional and alternative assets: the traditional sector registered 25 percent growth during the year; while the alternatives sector saw growth of 12 percent, led by private equity and venture capital managers.

“Singapore continues to serve as the Global-Asia Pacific gateway for asset managers and investors,” MAS said, highlighting that 76 percent of AUM originated from outside of Singapore in 2019, and 69 percent was invested into the Asia Pacific region.

In 2019, Singapore also saw a net increase of 108 registered and licensed asset managers, bringing the total to 895 by the end of the year.

“As the asset management landscape evolves, it is important that managers continue to invest and position themselves in evolving growth areas such as sustainable investments, private markets and solutions-based strategies, while leveraging technology and innovation as an enabler,” MAS said.

MAS says ESG considerations continue to be at the forefront of investors and asset managers’ minds, and that the pandemic has reinforced the importance of integrating sustainability into investments to safeguard against risks and generate long-term value.

Within the pool of survey respondents, asset managers in Singapore have continued to accelerate their ESG adoption, with 40 percent of assets managed incorporating ESG considerations. UOB Asset Management and Fullerton Fund Management were highlighted for having taken “meaningful steps” in 2019 to expand their ESG teams and deepen capabilities in ESG investments, disclosure and stewardship.

As part of a drive to make Singapore a leading centre for green finance in Asia Pacific and globally, and channel capital to support the transition to a low carbon economy, MAS has recently launched new environmental risk management guidelines, which set out its supervisory expectations for financial institutions including asset managers in relation to environmental risk.

The guidelines are due to be finalised by Q4 2020, following which asset managers will have a year to make the necessary preparation before
they implement these guidelines.

MAS said it is has been working closely with Singapore-based asset managers to minimise business disruptions as well as support them in upskilling and venturing into new business streams. “This will ensure that the industry is well-positioned to capitalise on new opportunities as the economy recovers.”

In particular, MAS highlighted a SGD 125 million support package, announced in April, comprising enhanced support for workforce training and manpower costs to enable financial institutions including asset managers to train and deepen the capabilities of their employees. The package also includes a Digital Acceleration Grant to help smaller financial institutions adopt digital solutions.

“Collectively, these initiatives will allow Singapore-based asset managers to emerge stronger from the crisis and ensure that Singapore remains a leading global financial centre in the Asia Pacific,” MAS said.

MAS and ACRA are also working on enhancements to the VCC framework and Singapore’s limited partnership regime, to provide further structuring options for asset managers that wish to domicile investment funds in Singapore.

In addition, MAS is exploring widening market access via passporting and mutual fund recognition frameworks to boost demand for Singapore domiciled funds.

The full survey is available here.

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