Singapore Hedge Funds Lean on Stability, VCC and ASEAN Access as Hong Kong Gains Momentum

Singapore remains a key destination for hedge funds seeking an Asian presence, relying on robust infrastructure and strong regulation while facing regional competition. According to IG, both Singapore and Hong Kong vie to become Asia's hedge fund hub, serving as gateways to wealthy regions and offering excellent infrastructure, regulatory frameworks, and low taxes. Sally Mung of BNP Paribas notes that innovation in onshore fund structures has solidified Singapore's position as a regional funds hub and a locus for growth.  

The Variable Capital Company (VCC) initiative has lowered entry barriers, allowing managers to reach a broader range of individual investors. Recent regulatory moves by the Monetary Authority of Singapore (MAS), such as simplifying licensing for AI-driven fund managers, have positioned Singapore as a testing ground for regulated machine learning. Hedge funds in Singapore have evolved from conduits for Western capital to creators of sophisticated quantitative strategies.  

Patrick Na of TMF Group states, "The VCC has been impactful since 2020, offering a flexible, corporate-like vehicle with variable capital, umbrella structures, and straightforward re-domiciliation. This has lowered costs, sped up setup to weeks, and provided tax efficiencies." Hedge fund strategies represent about 20% of VCCs, with discussions ongoing to expand eligibility. Na adds that the structure has driven AUM growth, ecosystem development, and a shift toward onshore fund domiciliation. Kelly Chia of UOB Private Bank highlights Singapore's predictability, clear regulations, trusted legal system, and easy capital movements, along with tax efficiency and proximity to Asian markets, as practical advantages for hedge funds.  

Talent and visa constraints pose challenges, with tightened rules for expat employment in the financial sector making visa acquisition and extensions difficult, contrasting with Dubai's flexible approach. Chia acknowledges Singapore's stricter visa policies compared to Hong Kong but notes many managers accept this for Singapore's stability, policy consistency, and lower geopolitical noise, favoring long-term planning and family office capital. Na explains Singapore's appeal lies in its strategic position as a financial hub, strong regulatory framework, political stability, advanced infrastructure, and favorable tax regime, attracting both domestic and international funds. However, local politics complicate competitiveness, with some blaming expat influxes for rising costs and tightened employment pass rules driving senior managers to relocate to Dubai.  

Hong Kong has seen a 24% increase in hedge fund managers, private equity fund managers, and family offices from 2021 to mid-2024. Na argues Singapore retains structural advantages in political stability, clean governance, and ASEAN access, which Hong Kong cannot replicate. "The two cities are increasingly differentiated; Hong Kong dominates China-facing strategies, while Singapore serves Southeast Asia and broader Asia-Pacific mandates," he says. Regarding listings, Na acknowledges concern as Singapore Exchange (SGX) delistings exceed new listings, with firms opting for higher liquidity abroad. However, SGX and MAS have responded with initiatives like the SGX-Nasdaq dual-listing bridge to revive sentiment and attract listings. Singapore's strength remains in asset management and private capital rather than public equity listings.  

Despite more companies listing overseas, Chia notes Singapore remains attractive to hedge funds as managers allocate capital globally rather than relying on local IPOs. "Singapore's value is as a capital and decision-making hub, not an exchange destination. VCC structures have removed operational and tax friction, easing fund launches, strategy additions, and attraction of global allocators, tipping decisions toward Singapore over offshore alternatives," he concludes.