What Are the Minimum Assets Under Management (AUM) Requirements for Each Type of Fund Management License in Singapore?

Most of Singapore’s leading status in Asian finance comes from its effective regulatory system managed by MAS. Before managing funds for clients, fund management companies in Singapore are required to obtain the correct licenses. Fund managers should understand how much in assets each type of license will allow them to manage. For more clarity, refer to this comprehensive guide to fund management licensing Singapore

In this piece, we discuss the AUM rules for RFMCs, LFMCs and VCFMs that MAS oversees. It also examines what impact these new requirements have on operations and what MAS expects from fund managers based on how much AUM they manage.

Understanding MAS Fund Management License Categories and AUM Rules

Under SFA, MAS manages the rules for fund management companies and organizes fund managers in multiple licensing categories. Which categories a manager picks will show the types of investors they can serve, how big their operations should be and which rules they have to follow. The top three licenses for fund management are the following:

• Registered Fund Management Company
• LFMC is the name for a Licensed Fund Management Company.
  • Supporting Professional Firms (A/I LFMC)
  • Managing Retail Fund Management Company
• Venture Capital Fund Manager (VCFM)
  

Every license is designed with distinct characteristics and you will face unique limits depending on the amount of assets under management.

1. Minimum Assets Under Management (AUM) for Registered Fund Management Company (RFMC)

Under the RFMC structure, fund managers deal with few investors and have limited AUM. It gives smaller fund managers an easy and straightforward route to registration. This model is ideal for those asking what is RFMC under MAS regulations, as it provides a simplified framework for managing funds within defined limits.

AUM Requirements

• An RFMC must not have more than S$250 million in AUM.
• RFMCs cannot look after more than 30 qualified investors, out of which no more than 15 may be funds (investment pools).

Implications

• A firm must upgrade to an LFMC license when its AUM hits S$250 million or has more than 30 qualified investors.
• Cap is worked out by averaging AUM over the previous 3 months, so firms have to keep a close eye on their assets at all times.

2. Minimum Assets Under Management (AUM) for Licensed Fund Management Company (LFMC)

LFMCs can control more investments and are authorized to draw in a larger group of investors. LFMCs belong to two key subcategories and the requirements for how much is managed and who the investors are differ for each.

A. AUM for LFMC Serving Accredited/Institutional Investors (A/I LFMC)

Almost always, these fund managers are hired for clients who meet the requirements for accredited or institutional investors.

AUM Requirements

• There are no set AUM caps given by MAS to A/I LFMCs.
• Yet, the Monetary Authority insists that the business model and organizational framework should fit with the level of assets the firm oversees.
• Base capital for A/I LFMCs is set at S$250,000 and it should be enough to cover managerial costs for growing funds.

Operational Expectations

Even though MAS does not set an AUM limit for LFMC status, organizations should manage at least S$250 million of assets over time to make the extra regulatory costs worthwhile.

B. AUM for LFMC Serving Retail Investors (Retail LFMC)

Because they offer their services to anyone, Retail LFMCs have to meet the strictest rules.

AUM Requirements

• There is no specified AUM level, but MAS requires retail LFMCs to have the resources and support needed to care for retail investors well.
• All Retail LFMCs have to keep a minimum fund size of S$500,000 and their requirements increase with the funds and risks they handle.
  • If the fund’s AUM breaks a high level of S$1 billion or greater, regulators may recommend the Risk-Based Capital (RBC) framework.

Practical Benchmark

Even if MAS does not set any AUM standard for retail fund managers, in reality, they manage capital in the hundreds of millions to billions to ensure it is profitable to operate.

3. Minimum Assets Under Management (AUM) for Venture Capital Fund Manager (VCFM)

Managers of start-ups and venture capital firms primarily benefit from the VCFM regime. Among all licenses, the VCFM framework has the easiest requirements.

AUM Requirements

• MAS permits VCFMs to operate without any stated minimum or maximum regulatory AUM threshold.
• Nevertheless, the business model has to conform to all VCFM guidelines.
  • Funds need to have a fixed ending date.
  • Most of the investments are directed toward unlisted, early-stage startups.
  • All investors have to be accredited or fall within institutional categories.

Implications

• Since VCFMs deal mainly in venture capital, they usually manage funds of tens to hundreds of millions of dollars.
• Alternative investment management firms wanting to manage larger amounts of funds or invest in various asset classes may require a change to an A/I LFMC license.

Monitoring and Compliance: Why Minimum Assets Under Management (AUM) Matters

Fund managers rely on AUM for more than business results—they also need it for compliance reasons. It is important for MAS to check that firms constantly track their AUM, especially to do the following:

• Make sure they manage your money only within their allowed limits (e.g., RFMCs can’t go beyond S$250 million in AUM).
• Keep enough money on hand for the size of assets managed.
• Make sure to prepare your Annual Regulatory Returns as requested by the rules.
• When AUM increases, change or upgrade your compliance procedures (e.g., by improving how you manage your risks)

During routine checks, MAS will review AUM trends to check if the company’s setup is still right for how the business has grown.

Transitioning Between Fund Licenses Based on AUM Growth

Should an AUM amount be reached that is beyond the authorized level in the manager’s current license (for example, when RFMC manages over S$250 million), an upgrade must take place. The way this procedure is usually carried out includes:

• Getting ready to submit an application for an A/I or Retail LFMC license
• Strengthening internal procedures, compliance rules and amount of capital
• Keeping MAS up to date about operational changes

Disobeying license rules may lead to the regulator forcing the company to stop managing funds.

Conclusion: Understanding Minimum Assets Under Management (AUM) Requirements in Singapore

Fund managers in Singapore must meet certain AUM thresholds to get licensed. There is a maximum of S$250 million in AUM for RFMCs, compared to no hard limit for LFMCs and VCFMs, who must still grow and improve their operations and compliance controls.