Singapore's asset management industry expands by 15.7%: MAS

Strong pipeline of new managers, funds sees assets reach a total of about $4 trillion in 2019

MAS said Singapore is also fast becoming an Asia Pacific hub for asset managers.
MAS said Singapore is also fast becoming an Asia Pacific hub for asset managers.ST PHOTO: KUA CHEE SIONG

Singapore's asset management industry registered a robust expansion last year, aided by a strong pipeline of new managers and funds seeking investment opportunities in the Asia-Pacific region.

Assets supervised by Singapore-based managers grew by 15.7 per cent to reach a total of about $4 trillion by the end of last year, according to an annual survey by the Monetary Authority of Singapore (MAS) released yesterday.

Last year's jump in Singapore's assets under management (AUM) followed a more modest 5.4 per cent rise in 2018 to $3.4 trillion.

The number of registered and licensed asset managers also rose in tandem, with a net increase of 108 last year, bringing the total to 895.

Cementing the Republic's position as the Global-Asia Pacific gateway, 76 per cent of the AUM originated from outside of Singapore.

About 69 per cent of the total AUM in Singapore was invested into the Asia-Pacific region.

MAS said the region was also a key source of asset inflow for the money managers here.

Net inflows from Asia-Pacific clients to Singapore-based managers increased by 21 per cent last year, compared with a decline of 1 per cent in 2018.

Funds already invested in regional assets saw growth of 24 per cent, compared with a gain of just 1.3 per cent in 2018.

Within the Asia-Pacific, South-east Asian countries remained key investment destinations, accounting for 37 per cent of the total invested across the region.

INVESTMENT FLOWS

Investments by Singapore-based asset managers into equities and corporate bonds rose while safe haven assets - such as sovereign, quasi-government and supra bonds - fell in some regions and cash allocations were down.

The allocation by Singapore-based asset managers into equities rose to 42 per cent of AUM last year, from 41 per cent in 2018.

Meanwhile, investments into fixed income assets also increased, led by flows into corporate bonds, which accounted for 66 per cent of fixed income AUM last year.

STRAITS TIMES GRAPHICS

While traditional AUM - equities and fixed income - increased by a combined 25 per cent last year, Singapore's alternatives sector also continued to expand at a steady pace.

Private equity and venture capital firms posted strong growth of 14 per cent and 86 per cent respectively.

NEW FRAMEWORK FOR FUNDS

MAS said Singapore is also fast becoming an Asia-Pacific hub for asset managers seeking to locate their investments and fund management activities in the same destination through variable capital companies (VCC) - a new flexible corporate structure designed for it.

The central bank and the Accounting and Corporate Regulatory Authority (Acra) launched the VCC framework on Jan 15.

As at mid-last month, more than 120 VCCs have been incorporated with Acra, it said.

"The VCC has attracted diverse interest from global and local asset managers due to its flexibility, such as its ability to be used as either a standalone fund or as an umbrella fund with multiple sub-funds, across traditional and alternative investment objectives," MAS said.

COVID-19 CHALLENGES

Beyond the new VCCs, 86 new asset manager licences and registrations were issued in the first three quarters of this year.

"Despite the ongoing Covid-19 pandemic and lingering uncertainty on the full extent of its implications on the asset management industry, Singapore continues to be an attractive place for business," MAS said.

MAS said it 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.

These efforts will ensure that the industry is well-positioned to capitalise on new opportunities as the economy recovers, the central bank said.

MAS said that environmental, social and governance (ESG) considerations continue to be at the forefront of investors' and asset managers' minds.

Despite the dampening impact of Covid-19 on investment sentiment, global net inflows into sustainable funds have increased this year.

Singapore's share of ESG managed assets stood at 28 per cent last year, compared with 27 per cent in 2018, the survey found.

A version of this article appeared in the print edition of The Straits Times on October 01, 2020, with the headline 'Singapore's asset management industry expands by 15.7%: MAS'. Subscribe