5,000 New Funds & 10,000 Jobs – Are You Ready?

29 Jan 2020

You may have seen this word VCC (Variable Capital Company) being used on LinkedIn by the Funds community in Singapore and if you are not a technical expert in Law, Tax or Accounting, you may be wondering what is all the big fuss about? New regulations come out all the time…  so why should I care about this one?

Well, this new regulation does not just affect compliance professionals but it actually creates jobs for the entire funds ecosystem.

… the entire funds ecosystem, you say?

Yes it’s true – and this time, everyone actually wins (no fine print).   

This growth of opportunities brings glad tidings to the many eager fresh graduates looking to enter the funds industry or those that are keen to switch from the sell-side to the buy-side or those that are working already in the funds industry. The VCC framework is the key to opening the floodgate of opportunities, where previously chances of entering this industry were extremely scarce. From here on Singapore will prove once again to the world how it can compete with the best in class and become the Luxembourg of Asia.

So, how does it create jobs and how many?

Within the first 2 days since the launch of the VCC, 20 new funds subscribed to the pilot launch and a minimum of 100 new VCCs are expected to register this year primarily because the VCC framework creates an ecosystem in the funds industry that is not only efficient and flexible but also cost-effective.

Funds Partnership Asia estimates that for every VCC entering the market –  2 brand new jobs could be created in the ecosystem. Whether it is a re-domiciled fund or a new fund that is due to launch in Asia, we are anticipating more than 5000 VCCs set up by end of this decade! That creates a whopping estimate of 10,000 new jobs.  

This includes but is not limited to Fund Lawyers, Auditors, Fund Administrators, Company Secretaries; Trust Administrators, Independent Directors, Compliance and Risk Officers, or new Investment or Sales professionals.  With this promising plethora of opportunities opening up, we expect a multiplier effect as the number of registered VCCs increase.

Let’s do a quick comparison with other global players: Dublin’s current fund management work force is approximately 15,000 professionals. On the other hand, the Singapore Fund management community alone employs between 7,000 – 8,000 people purely on the buy side, without taking into consideration service provider employment numbers. Imagine the knock-on effect on the wider economy as more VCC seeds are sown and harvested!

Anticipating 5000 new VCCs in the next 10 years may sound pretty ambitious to some but according to PWC, APAC Assets under Management is set to outpace any other region globally and almost double from $15.1 trillion in 2017 to $29.6 trillion by 2025. The past 15 years in this industry, together with common sentiments from my friends and connections in the field have led me to this conclusion:  

 

OK, I’m in. How does it work?

Singapore is looking to offer any licensed fund manager up to 70% rebate on all fund set up costs (that is savings up to SGD150k!) .

Here are more highlights to look forward to:

  1. Fund managers need only pay their service provider’s fees in one location instead of multiple locations.

  2. Also, investors can expect greater tax efficiency that yields better returns. 

  3. Finally, fund managers do not just have to be in the same time zone, but can qualify if they are in same business district. 

These are very exciting times ahead in Asia and especially for Singapore! Funds Partnership is looking forward to continuing our Funds Partnership pursuit of “Impacting Individuals and Empowering Economies” through the newly-launched VCC framework.With more funds re-domiciled or anticipated to launch, this framework could impact even more individuals (E.g more jobs for local talent) and empower economies (even beyond our funds community!)

With so much talk about automation taking away our jobs, I believe this is a refreshing shift. Indeed, while only time will tell, I truly believe that the VCC framework will single-handedly bring more opportunities and prosperity to both employees and businesses.

If you’re interested to find out more about Singapore’s VCC structure as a fund manager or to understand our services better, get in touch with me here:


Ayyaz Ahmad
APAC Managing Director
ayyaz@fundspartnership.com