Singapore's credentials draw investments in hedge funds

A view of Singapore's central business district and city skyline.
A view of Singapore's central business district and city skyline.PHOTO: ST FILE

It was insightful to read that some of the world's top performing hedge funds are based in Singapore (World's top hedge fund returns found in Singapore, Dec 17).

In addition to the theories postulated to explain this phenomenon, one more explanation - which is more fact than theory - could be that of Singapore's sterling reputation as a global financial centre.

Reputation is arguably the performance differentiator and key determinant of investment performance which contributes substantially to investment strategy distinctiveness - the X-factor which enables an investment fund to deliver superior returns and stand out from its peers in the investment universe.

Consider, for instance, this year's Global Financial Centres Index survey by London-based think-tank Z/Yen and the China Development Institute, which ranked Singapore in fourth place.

Singapore excelled in all segments of competitiveness measured, including financial sector development, business environment, human capital, infrastructure and, of course, reputation - all key elements of a robust financial ecosystem that's conducive for investments.

Singapore also possesses inherent advantages which give it a persistent and competitive edge as a global financial centre, such as Singapore's central location as a major financial hub within South-east Asia, which itself is emerging as a major engine of global growth, and Singapore's robust regulatory regime which insulates investors against economic and political volatility, making it attractive to investors.

Singapore, moreover, persistently outperforms in other international rankings, such as being ranked No. 1 globally by the World Bank for ease of doing business from 2007 to 2016, which further augments Singapore's reputation as a global financial centre.

It is heartening that Singapore is able to punch above its weight in the competitive world of hedge funds.

Singapore certainly should not stop there, but continue to build on its strengths to make the Republic the global financial centre of choice for investments in hedge funds and other risk-managed bespoke financial products.

Woon Wee Min

A version of this article appeared in the print edition of The Straits Times on December 25, 2019, with the headline 'Singapore's credentials draw investments in hedge funds'. Subscribe