Robust infrastructure and strong regulation have been keytools in Singapore’s offering to hedge funds looking for a presence in Asia,although it continues to face stiff competition from other regional locations.SingaporeSummit: Meet the largest APAC brokers you know (and those you still don't!).According to IG, Singapore and Hong Kong are battling tobecome the Asian centre for hedge funds. Both cities are gateways to huge andincreasingly wealthy regions (Singapore for ASEAN, Hong Kong for mainlandChina) and benefit from excellent infrastructure, a strong regulatorybackground and very low taxes.Sally Mung, senior product manager, hedge fund services,Asia Pacific, securities services at BNP Paribas, observes that innovation inonshore fund structures has established Singapore as a regional funds hub andmade it a strong locus for growth going forward.As we have previously discussed, Singapore’s variablecapital company or VCC initiative has reduced the barriers to entry, inprinciple enabling managers to target a wider range of previously excludedindividual investors at a lower entry point.VCC and regulatory innovationAnother key recent development has been the move by the Monetary Authority of Singapore(MAS) to simplify the licensing processes for fund managers utilisingartificial intelligence, a decision that has transformed Singapore into atesting ground for the application of regulated machine learning.The role of Singapore’s hedge funds has also shiftedsignificantly over the course of this decade as they have transitioned frombeing simply channels for Western capital to creators of innovativequantitative strategies that are on a par with those offered by their peers inthe West.“The VCC has really been impactful since its launch in2020,” says Patrick Na, head of financial services, South East Asia at TMFGroup. “It offers a flexible, corporate-like vehicle with features such asvariable capital (easy subscriptions/redemptions), umbrella structures withmultiple sub-funds and straightforward re-domiciliation from offshorejurisdictions. This has lowered costs, sped up setup - which is now measured inweeks rather than months - and provided tax efficiencies.”Hedgefund strategies account for around 20% of variable capital companies, anddiscussions are ongoing around enhancements to further expand eligibility andsimplify processes. According to Na, the structure has directly contributed toAUM growth, ecosystem development (service providers) and Singapore’s shifttoward onshore fund domiciliation.Singapore is an attractive market for hedge funds because ofits predictability; regulations are clear, the legal system is trusted andcapital movements are relatively easy. Furthermore, with its tax efficiency,VCC structures and proximity to other Asian markets, Singapore is a practicalbase for running hedge funds, observes Kelly Chia, head of investment strategyat UOB Private Bank.Talent and visa constraintsOne of the challenges facing the hedge fund sector inSingapore has been the tightening of rules concerning the employment of expats- specifically in the financial sector - with anecdotal reports of companiesfinding it difficult to get visas for their staff and authorities making itdifficult for existing non-Singaporean workers to get visa extensions.This contrasts with the approach taken by Dubai, forexample, which offers many different kinds of work permits and operates a zerobureaucracy programme to make applying easy.“Singapore is stricter on visas and permanent residenciescompared to Hong Kong,” accepts Chia. “However, many fund managers accept thistrade-off for Singapore’s stability, policy consistency and lower geopoliticalnoise, giving Singapore an edge in long term planning and family office-drivencapital.”Competitive positioning and listingsSingapore's appeal rests on several reinforcing pillarsincluding its strategic position as a financial hub in Asia, a strongregulatory framework that provides a stable and transparent environment forinvestors, political stability, advanced infrastructure, strategic location anda favourable tax regime, says Na.All these factors attract both domestic and internationalhedge funds, he adds, noting that while Singapore and Hong Kong are the twodominant Asian centres, they differ in a number of ways in terms of focus andtalent attraction.“Local politics are complicating Singapore's efforts toremain competitive against Hong Kong and Dubai,” says Na. “Many Singaporeansblame an influx of expats - particularly from Hong Kong during the Covidlockdowns - for driving up housing prices and other costs. Singapore tightenedemployment pass rules for the financial sector and a lot of senior portfoliomanagers who have been in Singapore for years struggle to get permanentresidence, so after a few tries, they simply move to Dubai.”On the other hand, Hong Kong has been on the offensive. Theterritory saw a 24% increase in hedge fund managers, private equity fundmanagers and family offices over a three-year period to mid-2024.However, Na suggests that Singapore retains structuraladvantages in terms of political stability, clean governance and an ASEANgateway that Hong Kong simply cannot replicate.“The two cities are increasingly differentiated and nolonger seen as substitutable,” he says. “Hong Kong dominates for China-facingstrategies and Singapore for Southeast Asia and broader Asia-Pacific mandates.”On the question of whether Singapore may be losing somecompetitive edge as more companies choose to list on foreign exchanges, Naacknowledges that there is genuine concern. The Singapore exchange has seendelistings outnumber new listings in recent years, with many firms opting forhigher liquidity and valuations on US exchanges, Hong Kong or elsewhere.Singapore's growth is poised to moderate as its export-driven model is strained by geopolitical tensions and a fragmenting global trading system, though it could draw support from opportunities in the Middle East. https://t.co/o1KccqTNgC— The Japan Times (@japantimes) April 20, 2026“However, SGX and MAS have responded, for example with thenew SGX-Nasdaq bridge, a dual listing bridge connecting both exchangesproviding companies in Asia with a direct and harmonised framework, whose aimis to help revive sentiment and attract more listings,” he says. “Singapore’sstrength remains in asset management and private capital rather than publicequity listings per se.”Continued Attractiveness Despite Identified ConstraintsEven as more companies explore listing overseas, Singaporecontinues to remain attractive for hedge funds as most managers there allocatecapital globally instead of relying on local IPO pipelines, says Chia.“Singapore’s value lies in being a capital and decisionmaking hub rather than an exchange destination,” he concludes. “VCC structureshave also removed real friction – both operationally and in terms of tax -making it easier to launch funds, add strategies and attract global allocators.For many managers, this can tip the decision in favour of Singapore rather thanoffshore alternatives.”This article was written by Paul Golden at www.financemagnates.com.