Despite its small size, Singapore is home to a prominent group of investors in the Asian hedge fund space. Singapore-based institutions constitute approximately 10% of the Asia-Pacific investor pool. These Singapore-based hedge fund investors manage an aggregate of $775bn in total assets.
Wealth managers form the largest group (48%) of all hedge fund investors in Singapore. These wealth managers actively invest in the alternative asset class via the discretionary and non-discretionary investment management services that they provide clients. The next largest groups are fund of hedge funds managers, multi-family offices and endowment plans, comprising of 16%, 13% and 10% of all Singapore-based hedge fund investors respectively.
In terms of market focus, most hedge fund investors in Singapore seek exposure to the asset class on a global basis. When looking at specific geographic preferences, unsurprisingly, a significant proportion (39%) of the investor pool looks for hedge fund investment opportunities close to home by investing in Asia. A further 32% of Singapore-based hedge fund investors are interested in gaining exposure to emerging markets, while in comparison, just 19% and 16% of these investors respectively are open to specifically investing in the North American and European regions.
Over the next 12 months, institutional investors in Singapore are expected to remain optimistic towards hedge funds and allocate more capital to the asset class. Preqin’s Hedge Fund Investor Profiles database shows that just under half of the investors based in Singapore plan to add new funds to their portfolios in 2013. Forty-seven percent of these investors will be looking to increase their allocations to long/short equity strategies. These investors also express an appetite for macro (40%), multi-strategy (40%) and CTA (27%) investment vehicles.
Moving forward, institutional hedge fund investors in Singapore can also expect more transparency and accountability in the domestic hedge fund space due to recent regulations enforced by the country’s financial regulator, the Monetary Authority of Singapore (MAS). The new rules, which require all hedge fund managers to register with the MAS and employ risk monitoring systems by mid-2013, may help build a more robust local hedge fund industry and a degree of security for the more risk adverse investor.