Singapore fund industry still growing

The Monetary Authority of Singapore has just publicized a review it conducted of its investment management industry, with data as of year-end 2000. The results show modest growth, which is impressive given that Singapore seemed to have reached an equilibrium in attracting new managers. Nor was last year an easy year for fund managers given the bursting of the Nasdaq bubble in April, 2000.

Total assets under management (AUM) rose to S$276.2 billion ($153.7 billion), only 1% more AUM than reported at the close of 1999. Assets under discretionary management tumbled by 9% to S$166.4 billion, which MAS ascribes to falling asset values. This decline was compensated by a 21% rise in non-discretionary assets, to S$109.8 billion.

Most discretionary assets, 75%, were sourced from outside Singapore, mainly from Europe and the United States, although their share fell overall versus other Asian sources. Institutional funds increased their presence, accounting for 58% of all discretionary assets, up from 52% in 1999.

Some S$98.7 billion, or 59%, of discretionary assets were invested in equties, but, not surprisingly given the adverse markets, bonds accounted for 19% of investments, up from 12% last year. The vast majority of these assets were invested in Asia, 30% in Singapore alone and another 11% in Japan, although the small allocations to Europe and the US rose slightly.

As for the composition of the investment industry, it too expanded modestly. The number of registered professionals rose by 10% to 1,000 people, including 740 fund managers and 260 investment analysts. The majority of these are equities experts, and MAS is particularly proud that 40% have more than 10 years of relevant experience. In addition the number of fund management companies active in Singapore rose by 24 to 215.

So did the number of unit trust managers, up to 31 from 25 last year. Unit trust assets under management also rose by 15% to S$7.8 billion. While most of this is in equities funds, the tough markets led to a rise in balance and capital-guaranteed funds; indeed, the number of unit trusts with a guarantee rose from one in 1999 to 10 in 2000. Net subscriptions were up nearly 200% over 1999, with S$2.9 billion swelling the industry.