Investors, fund management executives, funds distributors and securities regulators in Singapore have had to operate on gut feel when it comes to understanding what products are selling. Unlike other markets in Asia except for Malaysia, Singapore has had no mechanism to compile data on funds flows.
Now the Investment Management Association of Singapore (Imas) has drummed up sufficient support from fund houses to assemble this data. Lipper will collect data provided by fund companies, with the aim of publishing the first report on June numbers sometime in July, says Andrew Kwek, executive director at Imas.
Many fund companies have resisted such a move for years, because they are worried that they will look bad if they suffer redemptions. Recently, however, Imas has won support from most large players, which have become alarmed at the loss of confidence in the industry among Singapore's retail base.
"Confidence in unit trusts is at an all-time low," Kwek says. "It's reaching into inertia and apathy, and maybe even fear." Imas' response is to give investors more information and bring transparency to the industry. "We want investors to know exactly what they're getting into. We want them to see that there are good funds, and bad funds, and that it may not be a good thing to buy the flavour of the month." Imas is also promoting the use of financial advisors.
The bigger global funds companies already provide similar information on subscriptions and redemptions in other markets, and are comfortable with the idea.
"Conceptually it's a good idea," says Lindsay Mann, Singapore CEO at First State Investments. He says the industry had lacked the initiative to get such a project started, and that there had been an expectation that the government would do this sort of work.
But because many fund houses still fear revealing their data, compliance will be voluntary, and the published data will only represent aggregates among fund types.
Most markets in Asia, including Japan, require this data be released for each company. Hong Kong has been the exception: it has compiled retail funds data for over a decade but publishes the results on an aggregate basis.
This leads to data of questionable quality. Sally Wong, executive director at the Hong Kong Investment Funds Association, says, "Our challenge is to continuously enhance the quality of the data. Due to the regional role of the Hong Kong offices of many fund companies, and the fact that funds are sold through distributors (often nominee companies), the sales numbers may be from multifarious sources. What we have been working on is to segregate the Hong Kong-sourced sales numbers from others and I can assure you this is not an easy task." The HKIFA has recently begun cleaning the information to highlight assets sourced just from Hong Kong's retail market, not from other jurisdictions or from other types of investors. Wong says another challenge is getting timely data from industry members.
Hong Kong's experience - which also is voluntary, and faces hostility from some fund houses worried about looking bad - shows that Singapore's market is not about to become as transparent as it should be. But Imas and Lipper's initiative should be welcomed by most market participants. Right now, the only gauge of fund flows in unit trusts is the CPF-authorized market, which is tiny compared to cash retail.
The next edition of AsianInvestor magazine, available in July, will examine trends in Singapore's unit trust industry.
