Singapore's AUM up 7% to $2.7trillion: MAS

The MAS has been working with the industry to deepen the financing ecosystem for regional and local companies. It will implement a simplified regulatory framework for venture capital managers by the end of this year.
The MAS has been working with the industry to deepen the financing ecosystem for regional and local companies. It will implement a simplified regulatory framework for venture capital managers by the end of this year.ST FILE PHOTO

Sustained net fund inflows and improved market valuations support the growth, says MAS

Assets under management (AUM) expanded in Singapore last year on the back of a global recovery in the wealth management industry.

Total assets managed by locally based managers grew 7 per cent to $2.7 trillion last year, said the Monetary Authority of Singapore (MAS) yesterday in its annual industry survey.

Sustained net fund inflows and broad-based improvements in market valuations supported the growth, it added.

The increase was under the 9 per cent rise in AUM in 2015.

Last year, alternative AUM grew 17 per cent, in line with global trends. Alternative assets, which include venture capital, hedge funds and private equity funds, cater to institutional and ultra-wealthy clients.

On the other hand, traditional AUM grew a modest 3 per cent.

The global asset management industry recovered last year, with AUM up 7 per cent to US$69 trillion (S$93.45 trillion), compared with 1 per cent in 2015.

MAKING MONEY WORK

Sitting in cash and waiting for a crash makes sense to some extent, but money still needs to work for you. That's where alternatives come in.

MR BRIAN TAN, fund manager and partner at Pilgrim Partners Asia.

A good part of this was down to valuations being boosted on the back of strong gains in the equity markets, the MAS said.

Passive funds and alternative assets continued the trend of growing faster than traditional assets, it noted, with passive funds expanding at 14 per cent and alternative ones at 9 per cent.

Mr Brian Tan, fund manager and partner at Pilgrim Partners Asia, said: "We've seen a natural demand for alternative returns. As public capital markets continue to defy the gravitational pull of fundamentals, investors themselves recognise the need to find other areas to allocate capital.

"Sitting in cash and waiting for a crash makes sense to some extent, but money still needs to work for you. That's where alternatives come in."

The MAS said: "Singapore will continue to deepen its venture capital and private equity capabilities, and establish itself as a vibrant enterprise financing hub to support the next generation of Asian growth companies."

It added that managers of those alternative assets "play an important role in stimulating economic dynamism and innovation".

The MAS has been working with the industry to deepen the financing ecosystem for regional and local companies. It will implement a simplified regulatory framework for venture capital managers by the end of this year.

Another move by the MAS involves devising a corporate and regulatory framework that will make it easier to incorporate and domicile investment funds across fund vehicles, with the aim of strengthening "Singapore's position as a compelling hub" for such activities.

Mr Tan noted that such moves signal good progress but more can be done.

He said: "Compliance requirements are still very onerous and that sets the bar very high for new entrants, but in a small country like Singapore (with) limited scope for local investments, you end up with a mismatch of big pools of capital and small targets.

"That's not the way to grow local talent where more entrepreneurial asset managers don't have the chance to even start. We're trying to overcome that with our agglomeration model at Pilgrim, but it's a battle we're fighting with only our own resource."

A version of this article appeared in the print edition of The Straits Times on September 27, 2017, with the headline 'Assets under management in S'pore up 7% to $2.7 trillion'. Print Edition | Subscribe