Singapore reconsiders hedge fund rules

Hot on the heels of Hong Kong’s decision to open up the hedge fund market to retail investors, the Monetary Authority of Singapore (MAS) is now revising its own rules on retail hedge fund investments, bringing it in line with its main regional rival.

The revision comes just over a year after Singapore first published guidelines for retail hedge funds in June 2001, and just a few months after Hong Kong’s Securities and Futures Commission announced its own guidelines for retail investor participation in May.

“The new proposals are very much in line with the guidelines in Hong Kong,” said Bo Kratz, chief executive of ABN Asset Management, based in Singapore. “Not surprisingly, it means the MAS has been keeping an eye on Hong Kong, and it now opens hedge fund investments up to a broader range of investors.”

The proposed guidelines differentiate between single hedge funds, a fund of hedge funds and capital protected or capital guaranteed hedge funds. Like the Hong Kong regulations, Singapore’s retail investors will be able to invest in hedge funds with a 100% capital guarantee with no minimum investment requirements.

For a fund of hedge funds, a minimum investment of S$20,000 ($11,435) is required, with an additional stipulation that managers should invest in at least 15 funds to ensure diversity. In Hong Kong, the minimum investment for fund of hedge funds is $10,000, and managers must invest in a minimum of five funds.

Investors looking to invest in a single hedge fund, however, must be prepared to invest S$100,000 ($57,177), again similar to the Hong Kong minimum investment of $50,000. The original Singapore regulations issued last June had originally stipulated a minimum investment of S$100,000 for all types of retail hedge fund.

“It’s an improvement because they’ve lowered the minimum investment from a very high S$100,000, but they’ve also distinguished between a fund of hedge funds and a single strategy hedge fund, which is good because they have completely different risk profiles,” added Kratz.