Singapore's dynamic investment landscape offers a variety of fund structures, each catering to different strategies and investor needs. For fund managers, navigating the complexities of these structures is essential to ensure optimal performance and compliance. Whether you’re looking to launch a fund, restructure an existing one, or gain a clearer understanding of the regulatory environment, knowing your options is key. This article explores the most common fund structures in Singapore and what you need to consider before making a choice.
The Variable Capital Company (VCC) has quickly become the leading choice for investment funds in Singapore. Launched in 2020, the VCC was introduced to offer greater flexibility to fund managers and simplify the regulatory environment. Unlike traditional fund structures, the VCC allows for multiple sub-funds with segregated assets and liabilities, all within one legal entity.
For those looking to launch or manage a fund in Singapore, the VCC is undoubtedly a structure to explore. However, keep in mind that to operate a VCC, the fund manager must be licensed by the Monetary Authority of Singapore (MAS).
Unit trusts are one of the oldest fund structures in Singapore and are still a popular choice for certain types of funds. In a unit trust, assets are held by a trustee on behalf of investors. The fund manager handles the investment decisions, while the trustee ensures that the assets are managed in line with the fund’s objectives.
While they are traditional and well-regulated, unit trusts might not offer the same operational efficiency and flexibility as newer structures like the VCC.
Limited Partnerships (LPs) are a common choice for private equity, venture capital, and real estate funds. This structure offers a unique arrangement where there are two types of partners: general partners (GPs) and limited partners (LPs).
LPs are often used as feeder funds to master funds domiciled in Singapore, providing a tax-efficient way to pool capital. This makes the LP structure a favourite among private equity and real estate investors who want to separate management from capital raising.
Choosing the right structure for your fund is not a decision to take lightly. Several factors must be considered to ensure that the fund operates effectively and remains compliant with Singapore’s regulations. Here are some of the key considerations:
The structure you choose should align with your fund’s investment strategy. If you are managing a private equity fund, an LP might be the right choice. However, if you plan to offer a diversified range of investment options under one roof, the VCC provides more flexibility.
All fund structures in Singapore must adhere to the regulations set out by the MAS. It’s crucial to understand the licensing requirements, investor protections, and reporting obligations associated with each structure.
Singapore is known for its attractive tax incentives for fund managers and investors. The VCC, for example, is eligible for a range of tax exemptions, making it a highly attractive option for funds looking to minimise tax liabilities. Understanding how taxes apply to your chosen structure will significantly impact your overall strategy. In this case, it’s crucial to engage an Accounting Services Provider to ensure compliance with Singapore tax laws.
Operational efficiency is a major factor when selecting a fund structure. VCCs provide a streamlined process for managing multiple sub-funds with segregated assets and liabilities, reducing complexity and costs. On the other hand, unit trusts may require more administrative oversight, especially when dealing with multiple sub-funds.
Choosing the right fund structure for your investment vehicle is essential to achieving your financial and operational objectives. Whether you opt for the flexibility of the VCC, the traditional approach of unit trusts, or the tailored approach of LPs, Singapore’s diverse fund structures offer a range of benefits.
At Simplified Asia, we understand the complexities of setting up and managing funds in Singapore. Our expert team is here to guide you through the entire process, from choosing the right structure to ensuring compliance with all regulatory requirements.
If you’re looking to launch a fund in Singapore or need support with fund management, contact Simplified Asia today to discuss how we can help streamline your operations and enhance your investment strategy.
