The investment management industry in Singapore has generally been expanding since the turn of the millennium. While 15 to 20 years ago the sector was dominated by local investment managers, Singapore has since encouraged foreign players to park money here, in return for these investments to be managed directly from Singapore.
The local industry showed resilience through the 2008 financial crisis, before growing 49% over the next five years. In phases, foreign portfolio managers started to relocate to Singapore, research teams were built to support them, sales people were hired to tap growing regional wealth, and operations teams were relocated to the Republic as part of a global shared-services strategy.
But now, in 2017, the Singapore investment management sector faces challenging times. Uncertain global growth is being compounded by compliance pressures, new technology, high sales costs, fee compression, and the evolving risk appetites of investors.
In light of this, here are some key trends affecting jobs in Singapore investment management this year.
Portfolio manager roles in short supply at traditional players
Investment managers have a scalable business model, where headcount growth does not need to be linearly correlated with AUM growth. Once critical AUM is achieved, it’s possible for management fees alone to cover both the cost of running the business and compensation. Portfolio managers also tend to stay on with their employers due to their long-term remuneration model.
With this scalable model now compounded by an uncertain Asian equities market and the growth of ETFs, portfolio manager job vacancies with established fund management houses have shrunk in Singapore. Portfolio managers looking for new jobs may find more opportunities in start-up family offices or in North Asian funds looking to expand into Singapore (in order to diversify their coverage into Southeast Asia stocks and/or to take advantage of the attractive tax environment here).
Recruitment by family offices
Family offices are increasingly popular with ultra-high net worth families wanting to set up their own investment vehicles. In Singapore, a family office normally starts off as a non-regulated privately held company before seeking to qualify for a licence to manage third-party monies.
The majority of hiring in this sector in Singapore has been by Asian family offices, with European and then Australasian the next largest groups. While family offices do hire portfolio managers, their overall strategy is normally centrally controlled and managed by a principal. Their investment mandate will consist of a mix of both public and private equities, the latter of which is typically an extension of the principal’s own business background.
Technology triggers hiring
Long-only investment managers in Singapore don’t typically house sophisticated technology due to their traditional long-tail investment appraisal process and low ‘churn’. Private equity players, for example, have basic technology needs.
However, hedge funds – which are set up similarly to proprietary trading desks at banks – spend more on IT infrastructure due to their high-frequency trading technologies. These firms sometimes need to hire small teams of developers in Singapore. Meanwhile, asset management firms that have embarked into quantitative investment have also been recruiting quants and analytics people, who are in short supply in Singapore and globally.
Investment risk in demand
Fund managers in Singapore are looking at rescoping the requirements of their investment risk teams. Historically this function has hired former portfolio managers. But now, following a trend started in the West, market risk practitioners from banks and hedge funds have become popular candidates for investment risk jobs in Singapore.
Compliance
Similar to the regulatory pressures exacted on banking, compliance has been a major focus for the investment management industry. The Monetary Authority of Singapore has been increasingly stringent on the qualifying requirements for issuing licences to new money-manager start-ups, as evidenced by long waiting lists of applicant firms in its queue. One of the first people start-up funds will hire are compliance officers – or they will take the increasingly popular route of outsourcing the compliance function.
Becoming more like banks?
There is also a trend of investment managers in Singapore taking on more bank-like regulatory structures. Traditionally in investment management, unlike in banking, the same department looks after both operational risk and compliance. But this may change under an increasing climate of regulatory control, with large investment firms adopting bank-like structures that separate compliance and operational risk into different units under a ‘lines-of-defence’ model.
Pan Zaixian is the general manager of Kerry Consulting in Singapore.
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