It’s official! Small is the new big. The Boston Consulting Group’s recently released findings reveal that the tiny island of Singapore is home to the world’s highest concentration of millionaire households – with 15.5% of its population having at least US$1 million in assets under management. Singapore is also the country with the fastest growing number of millionaire households, with 170,000: an increase of almost a third from 2009.
There is potential for asset management companies, particularly those who manage Shariah funds, to capitalize on such an opportunity: especially as the Monetary Authority of Singapore last month announced its intention to strengthen the country’s fund administration services. It was reported that although about half the conventional funds currently sold in Singapore are Dublin and Luxembourg-domiciled UCITS funds, few if any are administered there.
Islamic funds are not a novel form of investment in Singapore. In 1995, HSBC (Singapore) launched its Takaful Global Fund. That same year, cooperative insurance society NTUC Income also launched the NTUC Takaful Fund.
Most if not all the funds mentioned above cater to institutional investors, high net worth individuals and ultra high net worth individuals, who are indifferent to the Shariah compliant traits in these funds.
However, the same cannot be said about the retail sector. Eurekahedge lists only nine such Islamic funds domiciled in Singapore. Miniscule in asset size and number of funds, their lackluster rate of return is evidence that retail funds have a lot of catching up to do.
As the number of millionaire households continues to rise in Singapore and Singapore’s regulators continue their efforts to provide a more conducive environment for asset management companies, this may be the right time for the funds industry to dip its toe into Singaporean waters and reach out to these affluent individual investors.