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Singapore's asset management industry clocks strong growth; AUM up 19% to S$3.3 trillion in 2017
TOTAL assets managed by Singapore-based asset managers rose by 19 per cent to S$3.3 trillion at the end of 2017, compared to the S$2.7 trillion in 2016, outpacing the 15 per cent average growth rate of the previous five years.
The growth was broad-based, across traditional and alternative assets, on higher valuations and inflows to Asian markets.
Asset managers continue to view Singapore as a conducive place to conduct portfolio management activity, the Monetary Authority of Singapore (MAS) said in its annual Asset Management Survey. Some 800 respondents across institutions such as banks, finance and treasury centres, and financial advisers took part in the 2017 edition of the survey.
There was a net increase of 55 registered and licensed fund managers in 2017, the survey showed, taking the total number of registered and licensed fund managers to 715.
Growth in traditional AUM (assets under management) soared to 20 per cent in 2017, compared to 3 per cent in 2016, while growth in alternative AUM was steady at 17 per cent.
Within alternative AUM - which includes sectors such as real estate, hedge funds and private equity (PE) - PE AUM growth rose by 23 per cent, driven by the deployment of capital by leading global managers for their flagship Asia-focused funds.
However in venture capital, AUM growth fell as managers returned capital to investors after realising gains in their investments that more than offset the pace of capital deployment into new investments.
Last year, Singapore-based asset managers received S$220 billion of net inflow of funds, higher than 2016's net inflows, due to favourable demand for Asian investment strategies in both fixed income and equities, which are predominantly managed out of Singapore.
Looking at sources of funds, Singapore-based sources made up 22 per cent of total AUM. Out of the remaining 78 per cent of ex-Singapore AUM sources, 33 per cent was sourced from Asia-Pacific, 19 per cent came from North America, 17 per cent originated from Europe while the rest of the world took up the last 9 per cent.
Allocations to the various asset classes remained largely unchanged in 2017 from 2016. The lion's share of allocation again went to equities, rising to 44 per cent from 42 per cent on improved economic fundamentals, led by increased investments into Asia-Pacific and North America.
Asia-Pacific again remains the favoured investment destination for Singapore-based asset managers, with the region accounting for about 67 per cent of total AUM in 2017 compared to 66 per cent in 2016. Asean nations made up slightly more than half the investment destinations within that number.
In 2017, the fund size of Authorised Collective Investment Schemes (CIS) and Recognised CIS offered in Singapore rose 24 per cent to S$101 billion, a 16 per cent average growth rate in the past five years. The increase in CIS funds size was led by Recognised CIS, which rose by 37 per cent to S$53 billion. Growth of Authorised CIS was 12 per cent, reaching S$48 billion. Authorised CIS are schemes constituted in Singapore and offered to retail investors in Singapore, while Recognised CIS are schemes constituted outside Singapore and offered to retail investors in Singapore.
To make Singapore a hub for both fund management and domiciliation, the MAS has introduced a new corporate framework for investment funds, called the Variable Capital Companies (VCC) structure, to encourage fund domiciliation activities in Singapore.
Parliament passing the VCC Bill on Oct 1, 2018 will facilitate the domiciliation of investment funds in Singapore across traditional and alternative fund vehicles, for both open-ended and close-ended funds. The MAS will look to launch the VCC framework in the second half of 2019.
"The asset management industry is undergoing transformation, driven by the use of technology and innovation to enhance competitiveness," the MAS said, adding that it is encouraging the development of a "vibrant fintech ecosystem".