Singapore plans new multi-asset, open and closed ended investment vehicle

The Monetary Authority of Singapore (MAS) is looking to introduce a new multi-asset, dual class investment vehicle and a Green Bond grant scheme, in a series of bold initiatives designed to regain the ‘trust of investors’ in the region.

The moves were introduced at today’s Investment Management Association of Singapore’s 20th Anniversary Conference, where IMAS proposed a move to offset the cost of companies issuing sustainability-oriented ‘green’ bonds and announced that is also consulting on its plans to introduce a new type of investment into the region, via its new Singapore Variable Capital Company, or S-VACC model.

Singapore’s Asset Management Industry was also told that if its bid to rebuild public trust in its investment industry is to be successful, then sustainable or ‘green’ investments could be the best route to success.

In his keynote address at the IMAS Conference, held at the Ritz Carlton in Singapore, Nicholas Hadow, chairman of IMAS, outlined the plans adding that sustainable investing is key to be able to “innovate and add value to investors”.

Hadow added that MAS and IMAS are looking at corporate structures for investments to add to three types of structures currently used by investment funds in Singapore, namely unit trusts, companies formed under the Companies Act, and limited partnerships and announced the launch of a public consultation into a new Singapore Variable Capital Company, or S-VACC offering.

Variable investment solution

“At this conference last year, we said that MAS and ACRA were exploring the feasibility of introducing a new corporate structure for investment funds, to accommodate open-ended investment companies,” he said. “These entities allow for the entry and exit of capital at any time, through the issuance of new shares and redemption of existing shares.

“MAS will be launching a public consultation today, to solicit feedback on the new corporate structure, which is called the Singapore Variable Capital Company, or S-VACC. The S-VACC will complement our existing corporate structures with one that is tailored for investment funds.”

The S-VACC proposes to allow asset managers to further consolidate their operations in Singapore, by domiciling more of their funds here alongside their fund management activities.

“We believe this will spur demand for fund-servicing activities such as accounting, legal, custody and tax in Singapore, therefore creating more jobs in the broader professional services sector,” said Hadow.

Flexibility

“In addition, S-VACC provides greater flexibility and cost efficiency to asset managers,” he said. “It allows for both open-ended and close-ended fund structures. It allows for investments across all asset classes, and may be used by both retail and private funds. S-VACCs can be listed and unlisted and invest in a wide range of asset classes, which will open up more options for retail investors to purchase shares in S-VACC funds, and invest beyond unit trusts.

“S-VACC will also allow asset managers to harness economies of scale, by consolidating administrative functions at the umbrella fund level. This means that sub-funds, with varying risk levels, different investment objectives and classes of investors can be housed together under the same umbrella as a single legal entity,” said Hadow.

The broad outlines of this proposed S-VACC structure are in a consultation document which MAS will be releasing after today’s event. 

ABOUT THE AUTHOR
Gary Robinson
Deputy Editor, International Investment and Head of Video at Open Door Media Publishing. A fully qualified journalist and filmmaker with more than 20 years' financial services experience, both as journalist and originally as an IFA.

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