VCCs: A Game Changer in Fund Management Industry

Singapore Variable Capital Company (VCC) Structure

Based on the latest asset management survey of MAS, more than 400 VCCs have been set up since the introduction of the framework early in the year 2020. These VCCs are setting up to manage either a single standalone fund or an umbrella fund with multiple sub-funds. The implementation of tax benefits for Singapore fund managers have made offshore jurisdictions less appealing. This will result in an increasing inflows of offshore funds from tax havens like Cayman Islands and Bahamas to Singapore. To further encourage the adoption of VCCs, MAS has implemented a VCC Grant Scheme that provides a grant of up to S$150,000 for each application. Overall, with the increasing number of VCC structures, we can expect the asset under management (AUM) of Singapore to rise even higher than the 17% growth in 2020.

On the other hand, there is a rising trend of setting up single-family offices (SFOs) in Singapore to manage the assets of families. As highlighted by the chief executive of Gordian Capital, Mark Voumard during an interview session with Asian Investors, the MAS is looking to revise its VCC fund structure to expand the use of VCC and allow a wider pool of fund managers including SFOs to setup their own VCC structures. If this is to be implemented in the near future, the VCC structure will definitely help to strengthen Singapore’s competitiveness as a global financial hub.