surveyed the asset management sector in Singapore in July and August to find out ways of improving the sector’s competitive edge. One key finding is that respondents like the idea of a new investment funds legal structure.

“What is unambiguously clear from the survey is that asset managers in Singapore see the need for a new investment funds law framework which they feel would help attract fund managers to set up new funds in Singapore, or bring existing ones here. This would, in turn, naturally grow the local asset management industry and supporting business ecosystem,” Justin Ong, asset manager leader, PwC Singapore, said in a statement accompanying the survey.

Later, in response to queries from this publication, Ong said:  "The majority of investment vehicle structures used today are in corporate form, mainly because the key investment markets and fund domiciles such as New York, Luxembourg and Cayman Islands are familiar with it.  In Singapore, corporate vehicles form the main structure of funds being distributed, both for retail and institutional purposes.  The open-ended characteristic is important because this allows the easy subscription and redemption by investors into and out of a fund, thus ensuring ready liquidity, as opposed to a closed-ended vehicle. "

"In Singapore, a large number of asset managers are already based here, but the funds which they set up and manage are usually domiciled offshore, where they can get access to open-ended investment company structures.  As Singapore only has a limited range of structures available, and the OEIC not being one of them, this results in the ancillary ecosystem of fund set-ups, administration, custody and servicing being mainly located outside of Singapore.  Accordingly, Singapore could benefit so much more from having such structures available to asset managers and investors, where funds domiciled locally would add to the economic and financial success of Singapore, from increased employment, productivity and services industry growing around this," Ong added.

Respondents to the survey were selected from a focused group comprising both registered or licensed asset managers in Singapore as well as a few foreign groups who had expressed interest in Singapore as a domicile for their future activities. They spanned across sectors such as retail unit trusts, as well as alternative funds like private equity, real estate and hedge funds.

The investment fund regime is inefficient and there is a lack of alternative financial statement reporting frameworks, lack of investor privacy, and lack of variable capital structure.

About 90 per cent of the respondents agree to an Open-Ended Investment Company (OEIC) structure, the report said. An “overwhelming” majority of the respondents were open to launching their next fund in Singapore if such a new framework was introduced, it said. A substantial majority requested for the creation of sub-fund/umbrella like structures under the new regime.

The report highlights how Singapore, while already one of the world’s, and Asia’s, most important investment and wealth management hubs, faces continual competitive pressures from inside and outside the region. In a similar spirit, a recently-minted government body set up in Hong Kong to promote the financial services industry has called for reforms to ensure the Asian jurisdiction competes vigorously against hubs such as London and the up-and-coming centres in Mainland China. The Financial Services Development Council, a 22-member body created in January, 2013, set out policy documents charting how Hong Kong, already one of the great wealth management, investment and trading centres of the world, stays that way as competitive threats mount. Its report is called Strengthening Hong Kong As A Leading Global International Financial Centre.

In a parallel to those answering the PwC survey on Singapore, the FSDC has asked for Hong Kong to adopt an OEIC fund structure, similar to one currently popular in markets such as Europe. OEICs are different from unit trusts in terms of pricing. An investor in a unit trusts buys at the offer price and sells at the lower bid price. An Oeic fund has a single price, directly linked to the value of the fund's underlying investments. All shares are bought and sold at this single price, so there is no need to calculate a spread.

While Asian jurisdictions push to stay competitive, data from Cerulli Associates, the research firm, shows the region in generally rude health. Investable assets of Asia ex-Japan institutions breached $10 trillion for the first time in 2012, rising by 9.6 per cent year-on-year. Cerulli Associates forecasts assets to continue to grow between 2013 and 2017 and hit $17 trillion by 2017, representing a compound annual growth rate of 10.1 per cent. Stronger increases are expected from Southeast Asia, as institutions in those markets are relatively underdeveloped and are growing their assets from low bases, it said.