Insight 7 October 2020

Singapore-based asset managers' AUM jumps 15.7% last year: MAS survey

As published by The Business Times

Total assets managed by Singapore-based asset managers grew 15.7 per cent to hit S$4 trillion in 2019, compared with a jump of 5.4 per cent previously, in line with the global trend driven by strong market performance and net inflows from investors.

Over the last five years, the Singapore industry's assets under management (AUM) expanded at an 11 per cent compound annual growth rate, according to the annual Singapore Asset Management Survey released by the Monetary Authority of Singapore (MAS) on Wednesday.

Against this backdrop, global AUM had gone up by 15 per cent to US$89 trillion last year, compared to a 4 per cent decline in 2018.

In Singapore, there was a net increase of 108 registered and licensed asset managers last year, bringing the total to 895.

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Growth came from both the traditional and alternative assets, with the traditional sector seeing a strong rebound in 2019, registering 25 per cent growth.

The alternatives sector saw continued growth of 12 per cent in 2019 to S$721 billion, led by private equity and venture capital managers, with combined AUM from both these asset classes growing 16 per cent to S$254 billion. This comes on the back of MAS's efforts to develop Singapore as an Asia-Pacific enterprise financing and infrastructure hub.

Last year, 76 per cent of AUM originated from outside of Singapore, and 69 per cent of AUM was invested into the Asia-Pacific region. Asia-Pacific remained a key source region with net inflows from clients, increasing by 21 per cent in 2019 as compared to a decline of 1 per cent in 2018.

Funds invested into the Asia-Pacific region saw growth of 24 per cent last year as compared to 1.3 per cent in 2018. Within the Asia-Pacific, South-east Asian countries remained key investment destinations, making up 37 per cent of investments into Asia-Pacific. Assets invested in South-east Asia grew 22 per cent in 2019, up from 0.4 per cent in 2018.

In the report, MAS said that Singapore is also fast becoming an Asia-Pacific hub for asset managers to co-locate their investment management activities alongside their investment funds domicile.

With the Variable Capital Companies (VCC) framework launched by MAS and the Accounting and Corporate Regulatory Authority (Acra) on Jan 15, 2020, more interest has been expressed by 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.

As at mid-September 2020, more than 120 VCCs have been incorporated with Acra within the initial eight months of the launch of the VCC framework.

Despite the ongoing Covid-19 pandemic and uncertainty around the full impact on the asset management industry, MAS said that 86 new asset manager licences and registrations were issued in the first three quarters of 2020.

It is now working closely with Singapore-based asset managers to minimise business disruptions as well as support them in upskilling and venturing into new business streams, said MAS.

Managers should continue to invest and position themselves in evolving growth areas such as sustainable investments, private markets and solutions-based strategies, while leveraging technology and innovation as an enabler, it added.

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