Beyond AUM, Singapore may need to redefine what it means to win the asset management race

FOLLOWING Singapore’s latest asset management push, much of the discussion has been centred on where the Republic now stands against rival financial centre Hong Kong.

But amid the talk of who is leading the race to be Asia’s top financial centre, Singapore might need to rethink what it means to “win”.

Persuading a global fund to book assets here or convincing a hedge fund star to relocate may be part of the equation, but Singapore’s longer term ambitions should go beyond that.

The Monetary Authority of Singapore’s (MAS) latest measures – including a new tax-exemption scheme, a hedge fund investment programme and a work-pass track to attract foreign talent – offer a timely opportunity to consider whether assets under management (AUM) alone tells us enough.

This comes as the Republic’s asset management industry has grown by an average of 7.5 per cent a year over the past five years, with AUM now approaching S$7 trillion.

AUM will inevitably remain a key metric to gauge the strength of a financial hub. But as the industry matures, the bigger question is what capabilities are being built alongside those trillions.

That means looking beyond the amount of assets placed here, to the people making decisions about the money.

Are key decision-makers and leaders based here? Are locally developed professionals progressing into senior roles? And are we producing more managers capable of building globally competitive investment firms themselves?

After all, there is a difference between being the place where assets are managed and being a place that produces asset managers. Singapore has excelled at the former, drawing global wealth with its stability and established regulatory framework.

But in its next phase, it might increasingly have to be the latter.

This does not mean choosing local over foreign. Global managers bring in significant assets, as well as expertise and networks that Singapore may lack.

But attracting the world’s best should help us develop our own. It is a win if a hedge fund star relocates here, but an even bigger one if analysts working with the person become portfolio managers themselves, with some eventually striking out to build firms of their own.

Singapore already has examples of what that can look like. Dymon Asia Capital has grown into a major home-grown alternative investment manager; as at May 1, its AUM stood at US$7.5 billion.

Quantedge Capital, founded in Singapore in 2006 with less than US$3 million, has grown into a multibillion-dollar manager with more than US$6.8 billion in AUM.

Their AUM is evidence of their heft. But it is what sits behind these numbers that stand out – investment firms and decision-making capabilities that were developed here, rather than simply assets attracted from elsewhere.

Nurturing home-grown talent

Now, the challenge is for Singapore to produce more of them.

To be sure, this is a formidable task as asset management is an industry that demands track records that take years to establish.

MAS’ new hedge-fund investment programme, which will invest with managers committed to establishing or deepening their Singapore presence, could add another piece to the ecosystem.

But over the longer term, Singapore’s wider asset management push should be judged by what takes root, not just what capital or talent arrive. As many market participants have pointed out, both of these are mobile.

Alongside AUM, Singapore could track the number of investment decision-makers based here; the number of locally developed professionals progressing into senior investment roles; the number of funds founded here; and the number of home-grown managers that reach meaningful scale.

These measures may take decades to shift meaningfully, but they are just as significant if Singapore wants to thrive as an asset management hub in the longer term.

AUM will remain a key measure of success, but the next stage of Singapore’s asset management journey should also be evaluated by whether it can produce more Dymons and Quantedges, as well as the people who will build them.