Introducing Singapore’s Fund Platform

Accelerating Fund’s Setup, Launch, and Operational Efficiency

Introduction

Singapore’s ambition to lead the global arena in full-service asset management and fund domiciliation is probably the world’s worst-kept secret. Its well-established and transparent regulatory framework, attractive tax incentives and concessions to Fund Managers, world-class infrastructure, including state-of-the-art financial technology (Fintech) infrastructure, a deep talent pool of skilled professionals, including finance professionals, legal experts and compliance specialists, has enabled a vibrant ecosystem that fosters collaboration, innovation and knowledge-sharing among industry players. Boasting over 1,100 registered and licensed Fund Managers overseeing assets worth around S$4.7 trillion, Singapore is indeed an attractive destination for new fund managers (“Prospective Managers”).

As with most jurisdictions, Fund Management is a regulated activity in Singapore. While Prospective Managers navigate through the myriad regulations and lengthy licence application process, they might miss out on a wealth of opportunities. Opting to start operations through an existing fund or asset management platform regulated by the Monetary Authority of Singapore (MAS) is an alternative that presents numerous compelling advantages.

The Fund Management Platform – A Plug-and-Play Approach

A fund or asset management platform refers to a structured framework or system that has been pre-established by a licensed Fund Management firm. This platform typically includes a combination of technology, processes, and expertise designed to efficiently manage and oversee investment portfolios on behalf of investors or clients while adhering to regulatory standards and best practices.  

In exchange for an agreed fee, Fund Management platforms offer a highly efficient Plug and Play approach to establishing a Fund Management business. The speed, ease, and reliability of setup has made it an increasingly attractive option for all Prospective Managers.

Merits and Limitations of a Platform

Fund or asset management platforms have their merits and limitations, depending on various factors such as the specific platform’s features, the needs of investors, regulatory requirements, and market conditions. Here are some key advantages and disadvantages of using a platform:

Advantages:

1. Speed: As a Plug-and-Play approach, a platform significantly compresses the time to launch a registered fund in Singapore, based on best practices and industry standards.
2. Certainty: The choice of applying for your own Fund Management licence entails the risk of rejection and the need to contend with a long application process and extended timelines.
3. Capital Efficiency: Base capital requirements are mandatory for all licensed Fund Management firms. The amount varies according to licence type. Riding on platforms of licensed Fund Management firms absolves this need for the Prospective Manager.
4. Professional Expertise: Platforms are managed by experienced professionals such as Fund Managers, investment analysts, and risk managers who bring expertise in investment analysis, portfolio management, risk assessment and market research. This expertise can lead to informed investment decisions and improved portfolio performance.
5. Convenience: Through platforms, Prospective Managers can access alternative investment opportunities or choose to manage their portfolios independently. A well set-up platform may even offer online portals, mobile apps, and automated investment tools. This convenience simplifies account management, monitoring and reporting responsibilities.
6. Cost Efficiency: Without a certain scale, the typical running costs of a Fund Management operation will be challenging to overcome. Platforms provide a more economical approach for any Prospective Manager and the Fund Management firm also benefits from an increasing Asset Under Management (AUM) by amortizing fixed costs over a larger base, aligning interests.
7. Regulatory Compliance: Platforms operate within a regulatory framework governed by regulatory authorities, ensuring compliance with legal and regulatory requirements related to fund management, investor protection, reporting, and transparency. This provides a level of assurance and accountability for investors.
8. Fund Raising: Prospective Managers can tap on the network and expertise of the Fund Management firm for capital raising activities.

Disadvantages:

1. Limited Control and Autonomy: Using a platform means relinquishing some control over investment decisions to platform managers or advisors. Prospective Managers may have limited input or customization options regarding specific investment choices, asset allocation, and portfolio management strategies. Plans to cultivate independent branding could also be curtailed under the umbrella of a platform. Notwithstanding, mutually agreeable arrangements are often found. A good fund platform usually strives to work well with Prospective Managers because their interests are very much aligned. In many cases, a common ground can be reached without compromising service or compliance quality from either side.
2. Fees and Charges: While platforms may offer cost-effective investment options, they may also charge fees in the form of a sharing of the management fee. For example, the Prospective Manager might want his/her fund to charge a 2% management fee per year. The fund platform will retain a small part of it (usually 20-30% depending on your choice of Fund Platform and also the assets under management (AUM) in the fund). With that said, engaging with a Fund Platform requires a much lower cost than running your own fund management company (with payroll, compliance, and all other overheads).
3. Potential Conflicts of Interest: Platform managers or advisors may have conflicts of interest, such as promoting proprietary investment products or receiving incentives for recommending certain funds or services. Prospective Managers should be aware of potential conflicts and ensure transparency in their interactions with platform providers. A good platform will usually provide high transparency with proper disclosure whenever it’s applicable.
4. Dependence on Platform Performance: The performance of a platform, including investment returns, operational efficiency, and customer service, can impact investor outcomes. Prospective Managers should assess the track record, reputation, and reliability of a platform and its service providers before onboarding.

Overall, while fund or asset management platforms offer benefits such as diversification, professional expertise, convenience, and regulatory compliance, Prospective Managers should carefully consider the potential drawbacks such as limited control, fees, conflicts of interest, market risk and dependence on platform performance when evaluating platform options.

Hallmarks of a Good Platform

A good platform will enable your business. The right one will turbocharge it. The hallmarks of a good platform include the following characteristics:

1. Transparency: A good platform provides clear and transparent information about its services, fees, that are associated with fund setup, launch, and ongoing management.
2. Professional Expertise: The platform is managed by experienced professionals with expertise in portfolio management, risk assessment and regulatory compliance. Investors benefit from the knowledge and skills of qualified professionals who know not just about the profession itself, but how it is applied to the local context (in Asia, or in Singapore).
3. Regulatory Compliance: The platform operates within a regulatory framework and complies with legal and regulatory requirements related to fund management, investor protection, reporting and transparency. Compliance ensures accountability and trustworthiness.
4. Cost Efficiency: The platform offers cost-effective solutions, including competitive fees and transparent fee structures. Cost efficiency maximizes investor returns by minimizing unnecessary expenses.
5. Technology Integration: A good platform leverages advanced technology, such as portfolio management software, data analytics tools and digital platforms, to enhance efficiency, accuracy and accessibility for investors and managers. The intelligent use of technology in the Fund Management industry is a growing differentiator of firms considered best-in-class.
6. Risk Management: The platform implements robust risk management practices, including risk assessment, monitoring, mitigation strategies and contingency planning. Effective risk management safeguards investor capital and promotes long-term stability.
7. Client Support: The platform provides excellent customer service, including responsive client support, personalized investment advice, educational resources, and regular communication updates. Strong client support fosters trust and loyalty among investors.
8. Innovation and Adaptability: The platform embraces innovation, adapts to market changes and incorporates industry best practices to enhance investment strategies, operational efficiency and client experience. Continuous improvement ensures relevance and competitiveness in the evolving financial landscape.

By embodying these hallmarks, a good fund or asset management platform demonstrates professionalism, integrity, transparency and client-centricity, ultimately creating value and trust for your investors.

Conclusion

Platforms play a pivotal role in the fund and asset management landscape, offering investors a plethora of benefits such as diversification, professional expertise, transparency cost efficiency and compressed time to market. A good platform is characterized by its commitment to regulatory compliance, robust risk management practices, transparent fee structures and strong client support. By leveraging advanced technology, fostering innovation and delivering consistent performance, platforms contribute to investor confidence, trust and long-term success. As the financial industry continues to evolve, platforms that prioritize integrity, transparency and client-centricity will remain at the forefront, shaping the future of fund and asset management services.