Research Reports » BNP Paribas Jan 2020

Mapping Asian fund distribution via Singapore’s VCC

Singapore_MerlionThe Singapore Variable Capital Company (VCC) is a multi-purpose tool, designed to provide asset managers and servicers with flexibility to meet investor needs.

Ahead of the company-type fund structure going live, BNP Paribas Securities Services and the Monetary Authority of Singapore (MAS) embarked on a European roadshow towards the end of 2019 to examine the merits of the scheme, which covers both traditional and alternative assets.

In Frankfurt, Rudi Siebel, managing director at the BVI German Investment Funds Association, gave the opening address. There followed an introduction by Dietmar Roessler, head of sales and relationship management at BNP Paribas Securities Services for Germany, to an audience of traditional asset managers, alternative managers and asset owners.

Key trends
Remi Toucheboeuf, head of investment fund services for Asia Pacific at BNP Paribas Securities Services, provided a detailed overview of the region’s key trends and evolving landscape. Asia’s financial structure is developing as its growing middle-class searches for products to invest in. Pension schemes are not well developed in all Asian markets and a long-term product with distribution capabilities is needed – indeed, more changes are expected in this space.

While Asia has seen impressive growth, it is still complicated for fund managers when it comes to setting up local capabilities. When European clients come to Asia, they expect to be able to use a single vehicle to distribute into a number of countries, but this is not the case. The result is often a combination of a global fund, such as Ucits, with a local fund, impacting the operating model.

Toucheboeuf then welcomed Carolyn Neo, executive director of the government finance group at the MAS, who shared her insights on asset management opportunities in Asia and Singapore and the VCC.

Points of opportunity
On one hand, developing Asia is a young, urbanising region, but the level of investment penetration is still low. On the other hand, developed Asia is ageing, which creates demand opportunities for both public and private retirement solutions, said Neo.

With rapid wealth creation and rising middle-class affluence, Asia now generates more than 42% of all new high-net-worth individuals’ wealth globally. When combined, these trends create new asset pools for fund managers to tap – and PwC expects assets under management in Asia Pacific to reach €27 trillion in 2025.

Panel insights
Next, Funds Europe and Funds Global Asia publisher Alan Chalmers discussed with an expert line-up whether the VCC will be a game-changer.

Panelists considered the VCC’s key features and benefits, what makes Singapore an ideal hub for fund domiciliation, the main considerations for fund managers when deciding on the legal form and tax implications of a new fund and the types of funds most likely to adopt the VCC – from retail to non-retail, open-ended to closed-ended, traditional to alternative assets and so on. You can listen to the podcast discussion here.

The roadshow then continued in Paris. Here, BNP’s head of strategic business development and transformation, Philippe Benoit, opened proceedings before Toucheboeuf, Neo and the panelists shared their insights.

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