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Managers highly receptive to new fund framework

Asset managers in Singapore are highly receptive to plans for a new investment fund framework, with about 90% preferring an open-ended investment company structure, according to a PwC survey.
Fund Selector Asia

PwC said an “overwhelming” majority of the respondents were open to launching their next fund in Singapore if such a new framework was introduced, while a “substantial” majority requested for the creation of sub-fund or umbrella like structures.

Nearly 89% of fund managers indicated their intent to launch their next fund in Singapore if a new investment fund legal framework was implemented, and also said they would encourage other fund managers without existing operations to also set up shop in the city state.

A majority of 84% of respondents think the current company law rules create complications for funds, with common pitfalls including a lack of alternative financial statement reporting frameworks, lack of investor privacy, and a lack of variable capital structure, limitations on distributions.

A variable capital structure that enables investors to enter and exit the investment vehicle without current pitfalls is highly needed.

“What is unambiguously clear from the survey is that asset managers in Singapore see the need for a new investment funds law framework which they feel would help attract fund managers to set up new funds in Singapore, or bring existing ones here,” said Justin Ong, asset management leader, PwC Singapore.

“A seemingly high acceptance of the Luxembourg model only further testifies our basic concept of keeping the approach to investment fund law regime to two distinct mechanics – legal entity framework and investment fund laws. Luxembourg follows that same model and was the pioneer to the idea,” the report said, noting 46% favoured the Luxembourg model.

PwC Singapore conducted the survey of the asset management community in July and August which included registered or licensed asset managers operating in Singapore, as well as some foreign fund groups, and spanned all the key industry sub-sectors, such as traditional funds, private equity, real estate and hedge funds.

The survey was intended to get a sense of the industry demand for new structures and flexibility in an investment fund framework, and what features would be deemed desirable that could lead to more interest in Singapore as a fund financial centre.

PwC last week detailed a while paper which proposed a revamping Singapore’s investment fund laws.

Part of the Mark Allen Group.