Hedge Funds in Singapore: Growth, VCCs and Regulation

Singapore’s asset management industry reached approximately S$6.7 trillion in assets under management (AUM) at the end of 2025, up about 10% from the previous year. Within the alternatives sector, hedge fund AUM stood at approximately S$343 billion.

The city-state has also continued to develop its fund management ecosystem through the Variable Capital Company (VCC) framework, its regulatory regime for fund managers and, more recently, targeted measures intended to attract and anchor hedge fund managers and investment talent.

For firms considering establishing a hedge fund presence in Singapore, however, choosing a fund structure is only one part of the process. The proposed fund management activities, investor base, regulatory status of the manager and ongoing compliance requirements must also be considered.

Why Singapore Has Developed as an Asset Management Hub

Singapore’s asset management industry is strongly international.

According to MAS’s latest Asset Management Survey, approximately 76% of Singapore’s AUM at the end of 2025 was sourced from outside Singapore. Asia Pacific excluding Singapore accounted for the largest geographical source of funds at 39%.

This international orientation is also reflected in where Singapore-managed capital is deployed, with the majority of AUM invested outside Singapore.

For fund managers, Singapore combines access to regional markets with an established financial services ecosystem and a regulatory framework covering fund management activities.

The continued growth of Singapore’s asset management industry does not mean every fund or manager follows the same structure. The regulatory and operational requirements depend on factors including the investment strategy, investor profile, legal structure and activities conducted by the fund manager.

Hedge Fund Growth in Singapore

Hedge funds form part of Singapore’s broader alternative investment sector.

MAS’s latest Asset Management Survey reports approximately S$343 billion in hedge fund AUM at the end of 2025, compared with approximately S$327 billion in 2024.

This sits within a much larger asset management industry that reached S$6.7 trillion in total AUM.

The number of fund management companies also reached approximately 1,320 at end-2025, reflecting the scale of Singapore’s broader fund management ecosystem.

Rather than viewing Singapore’s hedge fund sector solely through comparisons with other Asian financial centres, these figures provide a more useful indication of the domestic ecosystem available to managers considering Singapore as a base for their operations.

The Variable Capital Company Framework

One of the most significant developments in Singapore’s fund ecosystem has been the introduction of the Variable Capital Company (VCC).

The VCC framework became available in January 2020 and was designed specifically for investment funds.

A VCC can be established as either:

• a non-umbrella VCC operating as a single investment fund; or
• an umbrella VCC containing multiple sub-funds.

Under an umbrella structure, each sub-fund has separate assets and liabilities. This allows different investment strategies or portfolios to operate under the same VCC while maintaining segregation between the assets and liabilities of individual sub-funds.

A VCC also has greater flexibility in relation to its share capital than an ordinary company. For example, shares can be issued and redeemed without shareholder approval, and dividends may be paid from capital.

Further information on the current structure and registration requirements is available from the official Accounting and Corporate Regulatory Authority (ACRA).

VCC Adoption Has Continued to Grow

The VCC has moved well beyond its initial launch phase.

At the end of 2025, Singapore had 1,406 VCCs comprising 3,443 sub-funds, according to the latest MAS Asset Management Survey.

This represents substantial growth from the 660-plus VCCs referred to in earlier industry reports from 2022.

Hedge funds also continue to form part of the VCC landscape. According to the latest survey, hedge fund strategies represented approximately 19% of VCC fund strategies at end-2025.

The VCC is not limited to hedge funds. It is also used for private equity and venture capital, traditional investment strategies, external asset management and multi-family office strategies, among others.

For hedge fund managers, the appropriate structure should therefore be determined by the proposed strategy, investor arrangements, operational requirements and regulatory position rather than by the popularity of the VCC alone.

A VCC Is Not a Fund Management Licence

An important distinction for businesses entering Singapore is that establishing a VCC does not itself authorise a company to conduct regulated fund management activities.

A VCC is a fund vehicle.

Fund management, on the other hand, is a regulated activity under Singapore’s Securities and Futures Act 2001 (SFA).

A company intending to conduct regulated fund management activities generally needs to hold the appropriate Capital Markets Services (CMS) licence for fund management, unless an applicable exemption applies.

The fund vehicle and the fund manager should therefore be considered separately when planning a Singapore hedge fund structure.

What Happened to the RFMC Regime?

Older guidance on establishing a fund management company in Singapore may still refer to Registered Fund Management Companies (RFMCs).

That information is outdated.

Singapore’s RFMC regime was repealed in 2024. Businesses establishing new regulated fund management operations should therefore assess their activities against the current CMS licensing framework and any applicable exemptions rather than relying on older guidance describing RFMC registration as an available route.

This is particularly important for businesses using older fund setup guides, application checklists or advisory materials.

New Measures Supporting Singapore’s Hedge Fund Ecosystem

Singapore has continued to develop its policy framework for the asset management industry.

In August 2026, MAS announced a new package of measures intended to strengthen Singapore’s competitiveness as an asset management hub.

Hedge Fund Investment Programme

MAS announced that it will introduce a Hedge Fund Investment Programme.

Under the programme, MAS intends to invest with hedge fund managers that commit to establishing or deepening their presence in Singapore.

The programme is intended not only to anchor hedge fund managers and investment talent, but also to support the wider ecosystem, including ancillary service providers and prime brokerages.

Further implementation details are expected from MAS.

Proposed Tax Treatment for Profit-Related Returns

MAS also announced a proposed tax exemption for qualifying profit-related returns arising from the provision of fund management services to qualifying funds.

The measure is expected to take effect from the Year of Assessment 2027, with further details expected in Budget 2027.

Because the detailed eligibility and implementation requirements have not yet been finalised, fund managers should avoid treating the announcement as an automatically available tax exemption.

Investment Management Track Under ONE Pass

MAS and the Ministry of Manpower also intend to introduce a new Investment Management Track under the Overseas Networks & Expertise Pass, or ONE Pass, framework.

The initiative is intended to attract global leaders and senior investment professionals in the asset management industry and may take established investment-management compensation structures into account when assessing eligibility.

Together, these measures demonstrate a continued policy focus on anchoring asset management activity, investment talent and supporting financial services in Singapore.

What Should a Hedge Fund Manager Consider Before Setting Up in Singapore?

Establishing a hedge fund operation requires more than incorporating a fund vehicle.

Managers should assess several regulatory and operational questions before proceeding.

What activities will the manager perform?

The first step is determining whether the proposed activities constitute regulated fund management under the SFA and whether a CMS licence or an applicable exemption is relevant.

Who will invest in the fund?

The proposed investor base can affect the regulatory framework, fund offering arrangements and licensing considerations.

Managers should determine whether the fund will be offered to institutional, accredited, retail or other categories of investors and assess the applicable requirements.

What fund structure is appropriate?

A VCC may be suitable for some strategies, but the choice between a non-umbrella VCC, umbrella VCC or another fund structure should reflect the fund’s investment strategy, number of portfolios, investor arrangements and operational requirements.

Does the manager meet the applicable licensing requirements?

Fund management licensing can involve requirements relating to areas such as:

• corporate structure;
• financial resources;
• directors and key personnel;
• relevant experience and competency;
• compliance arrangements;
• risk management;
• internal controls; and
• anti-money laundering and countering the financing of terrorism controls.

The exact requirements depend on the proposed business and regulatory classification.

What ongoing obligations will apply?

Obtaining the appropriate regulatory status is only the beginning.

Fund managers may have continuing obligations relating to regulatory reporting, compliance monitoring, risk management, financial resources, AML/CFT controls and other requirements.

VCCs also have their own corporate and filing obligations, including annual returns and maintenance of required registers and information.

Singapore’s Position as a Fund Management Centre

Singapore’s hedge fund story has changed considerably since the VCC framework was introduced in 2020.

The country’s total asset management industry has expanded to approximately S$6.7 trillion in AUM, the number of VCCs has grown to more than 1,400, and hedge fund strategies continue to form part of the VCC ecosystem.

Recent measures announced by MAS also show that policymakers are seeking to anchor more fund management activity, investment talent and supporting services in Singapore.

For firms considering Singapore, however, these developments should be viewed alongside the regulatory requirements that apply to the manager and the chosen fund structure.

A fund manager should therefore establish its licensing position and operational requirements before launching or relocating hedge fund activities to Singapore.

How Alder Corporate Services Can Help

Setting up a fund management operation in Singapore requires careful consideration of both the fund structure and the regulatory status of the manager.

Alder Corporate Services can assist with:

• assessing applicable fund management licensing requirements;
• supporting CMS licence applications for fund management;
• reviewing application and supporting documentation;
• assisting with MAS correspondence relating to licence applications;
• supporting the establishment and administration of appropriate corporate structures; and
• providing ongoing compliance support after licensing.

Businesses considering establishing a fund management operation in Singapore can contact Alder Corporate Services to discuss the applicable regulatory requirements.

Frequently Asked Questions