The government of Singapore has approved a new fund management structure called Singapore Variable Capital Company (VCC) in an effort to secure a larger share of the fund management value chain.
The new bill enables fund managers to both manage and domicile their funds in Singapore.
Singapore assets under management (AUM) totalled S$3.3 trillion at the end of last year, with an average yearly growth of 15% in the past five years. However, bulk of the city’s fund managers currently domicile their funds in other jurisdictions such as Luxembourg and the Cayman Islands owing to their flexible corporate structures.
As a result, economic benefits generated by service providers for these funds accrue outside Singapore.
At the same time, domiciling funds overseas also results in additional costs due to use of various service providers in different countries.
With the new VCC structure in place, fund managers can reap cost savings with reduced compliance challenges.
Second minister for finance Indranee Rajah said: “Today, fund managers already conduct a good range of their fund management activities in Singapore – portfolio management, trading and research.
“The VCC framework will encourage fund managers to domicile their funds in Singapore, adding domiciliation activities to the fund management activities. This in turn will establish a full-service fund ecosystem in Singapore.”
Rajah anticipates the VCC structure to facilitate the creation of over 1,000 jobs, and said that VCCs operating from a Singapore office are likely to employ Singapore-based corporate secretaries, lawyers, fund administrators, among others.
“The VCC structure will complement and expand the existing suite of fund structures available in Singapore, such as the company, limited partnership and unit trust structures. Taken together, this will provide a comprehensive range of investment fund vehicles and structures to support investors’ needs,” Rajah noted.