Singapore is a leading Asia hub for wealth management in the Asia-Pacific region.
According to the result of 2010 Singapore Asset Management Industry survey result, the asset under management (AUM) by fund managers in Singapore have reached a new high of S$1.4 trillion.
The industry remains well diversified across asset classes, with slightly over half of assets in equities, and the remainder split across fixed income, alternatives, mutual funds and cash.
There has been a strong expansion of the alternative investment industry over the last few years. Singapore now have a vibrant community of alternative investment managers running a wide variety of hedge funds, private equity funds and real estate funds, which add diversity and depth to the broader asset management industry in Singapore. This diversity, as well as the strong ecosystem of ancillary service providers such as lawyers, tax advisers, prime brokers and fund administrators, helps to sustain the industry's long-term growth.
The fund management industry employed closed to 11,200 staff in 2010, of which about 2,700 were investment professionals. This means that the number of investment professionals has grown by 6.5% year-on-year. The increase was largely due to the growth in the number of portfolio management positions.
Asia's economic ascendency has created an increasingly prominent high net worth segment. According to World Wealth Report 2010, the number of millionaires in Asia Pacific surpassed Europe's for the first time in 2009. More than ever, this will generate unprecedented demand for professional money and wealth managers in the Asia Pacific region.
As Asian economies grow, its financial system will mature and grow in complexity, and Asian institutional investors will increase in number, size and sophistication accordingly, with greater numbers of sovereign wealth funds, pension funds, insurers, foundations, endowments, etc demanding money management services.
Demographic trends will generate demand for retirement planning. Fund managers based in Asia are well-placed to provide these solutions and services to harness these opportunities.
Singapore's standing as an international financial centre will continue to be underscored by our high regulatory standards, robust governance and legal framework, world-class infrastructure, highly-trained industry professionals and the government's strong partnership with the industry.
However, the asset managemetn industry will have to overcome challenges that have arisen as a result of the global financial crisis.
First, investors have become more savvy and also more risk-focused. They are demanding greater transparency from their fund managers, and are putting greater focus on managers' abilities to manage risks, particularly counter-party credit risk and liquidity risk. In order to continue attracting funds, managers must provide a clear indication of the strategy, risk and performance of funds and demonstrate to investors the investments are properly managed.
Second, the asset management industry faces tighter regulations which have been implemented globally, post-financial crisis. However, the change in regulatory requirements should be seen in a positive context as increased supervision and heightened corporate governance standards will help restore investor confidence and trust in professional money managers.
The asset management industry needs to build long-term trust relationships with their investors. More robust risk management practices, stronger corporate governance frameworks and enhanced transparency, as well as higher disclosure standards will bolster investors' confidence in their fund managers.
The industry should seek to develop tailored investment products and solutions that would help clients to achieve their long-term investment goals effectively while keeping within their overall risk appetite.
Singapore government is taking a few initiatives to help support the industry's long-term development.
First, building up the talent pipeline and enhancing competencies for the industry. Success in the investment management world hinges on finding the right talent and the right competencies. In order to develop the pool of available talent for the industry, MAS has implemented initiatives such as the Financial Training Scheme, which co-funds training costs for industry-professionals to pursue recognized accreditation programs such as the Chartered Alternative Investment Analyst (CAIA) and other technical training.
Second, reviewing the regulatory framework to ensure that it remains relevant. MAS has concluded public consultations on its proposed enhancements to the regulatory framework for the fund management industry. The revised framework calibrates the level of supervision and capital requirements to the size and complexity of the fund manager, its potential market impact and the sophistication of its client base. The proposed enhancements will help raise the standards and quality of the fund management industry in Singapore.
Third, enhancing financial research. Unlike developed markets, Asia is highly diverse, with countries at vastly differing stages of economic development. This creates a strong need to step up the understanding of Asian financial markets. MAS has identified the need for more relevant Asian-focused research to facilitate the growth of the industry, and has taken steps to encourage the build-up of research capabilities here in Singapore. This includes the Risk Management Institute (RMI), BNP Paribas Hedge Fund Centre, the EDHEC-Risk Institute and the NUS Centre for Asset Management Research and Investments (CAMRI). The government hope this will help build intellectual capital and develop innovative solutions through industry-academia collaboration.
Singapore continue to build on its role as a hub for Asia investments by supporting regional initiatives aimed at improving the depth and liquidity of Asian capital markets. Singapore has been actively involved in various regional projects and initiatives across multiple fora. This includes efforts to link regional stock exchanges, participating in ASEAN initiatives to develop its bond markets, and working with the World Bank to promote public-private partnerships (PPP) in funding regional infrastructure projects.
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