Fund managers based in Singapore, Malaysia and Thailand will find it easier to market unit trusts and mutual funds to retail investors in one another's countries, thanks to a new framework launched yesterday.
The new framework streamlines the authorisation process that a fund manager in one country has to undergo to sell collective investment schemes (CIS) across Asean borders.
A set of common Asean standards has been established to ensure fund managers who want to do this have the necessary experience and track record in managing retail funds offered under the framework, the regulators said.
The Monetary Authority of Singapore (MAS), the Securities Commission of Malaysia and the Securities and Exchange Commission, Thailand have also jointly published a handbook on the framework, which could eventually apply across the Asean region.
Mr Lee Boon Ngiap, assistant managing director (capital markets) at the MAS, said retail investors in these three markets will now benefit from an increase in the choice of funds.
"Fund managers in an Asean country will have a direct and efficient route to offer their funds to retail investors in other Asean countries. We look forward to the participation of more Asean jurisdictions in this framework over the coming years."
Mr Ranjit Ajit Singh, the chairman of the Securities Commission of Malaysia, noted that Asean has one of the highest savings rates in the world, and that these savings can be reinvested in the region - through investment funds - to generate returns and contribute to the region's future growth prospects.
This Asean CIS Framework is one of the initiatives undertaken by the Asean Capital Market Forum, which aims to develop an integrated capital market among Asean member states by next year.
The MAS has also introduced new provisions in the existing Code on Collective Investment Schemes to implement the framework in Singapore.
Ms Susan Soh, country head for Schroders Singapore, said this move would mean a wider range of offshore funds for retail investors to choose from. "More importantly, investors will benefit from cost savings as asset managers will no longer have to go through fund feeder structures."
Maybank Asset Management Singapore chief executive Goh Seng Kee agreed.
He said that previously, if Maybank wanted to market a fund that was created here to retail investors in Malaysia and Thailand, it would first have to create a feeder fund; each feeder fund would incur additional costs such as trustee fees and audit fees.
Ultimately, the new framework could lower prices for end investors and spur fund managers to be more innovative, he said.
"We believe the Asean CIS framework provides incentives to asset managers to consider developing funds that can be marketed cross border into the Asean markets," Mr Goh added.
"In fact, we have been planning to launch our first two funds in Singapore to coincide with the launch of the Asean CIS Framework. The two funds include our core Asian equity fund and our core Asian fixed income fund."
Schroders, which has a range of funds invested across equities, fixed income, multi-asset and alternatives, is also looking forward to the opportunity to widen its offerings across Asean, Ms Soh said.
"While we await more details of the distribution arrangements, we are very excited about the development and look forward to working closely with the industry players on the implementation of the programme in due course."
This article was first published on August 26, 2014.
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