Why Singapore's VCC is Gaining Traction as a Fund Vehicle
Since its introduction in 2020, the Variable Capital Company (VCC) has quickly established itself as a preferred structure for investment funds in Singapore. Designed with fund managers and investors in mind, the VCC provides a modern, flexible framework that enhances Singapore's role as a leading asset management hub. Notably, the VCC setup process is efficient and streamlined, offering a quick start for fund managers.
Globally, fund managers have long relied on Cayman SPCs, Luxembourg SICAVs, and Irish ICAVs. The VCC combines the best features of these structures while offering investors the credibility, governance, and ecosystem advantages of a major financial centre. For fund managers looking for both flexibility and international acceptance, the VCC has become a powerful option.
What is a VCC?
The VCC is a corporate structure tailored for investment funds. It can be set up either as:
A stand-alone VCC – a single pool of capital under one mandate, or
An umbrella VCC – with multiple sub-funds, each ring-fenced in terms of assets and liabilities.
This flexibility makes the VCC attractive for managers running multiple strategies, stages, or investor pools, while maintaining efficiency under one legal entity.
Why Singapore?
Singapore has become a natural choice for global and regional fund managers because of:
Credibility with investors – strong governance, regulatory oversight, and global reputation.
Strategic location – gateway to Asia, with deep connectivity to emerging and developed markets.
Robust ecosystem – a concentration of banks, auditors, administrators, and legal/tax professionals.
Operational efficiency – simplified compliance and administration compared to offshore-only structures.
Tax treaties & redomiciliation – Singapore’s tax treaty network and the ability to re-domicile foreign funds add to its appeal.
Fund Management Options
By law, every VCC must appoint a permissible Singapore-based fund manager. Managers can choose between:
Host Fund Manager – an existing licensed FMC provides regulatory cover, enabling fast setup and launch.
Own Licensed FMC – applying for a Capital Markets Services (CMS) licence gives you long-term control, branding, and credibility, but requires more time and resources. This option empowers you to shape your fund's identity and operations, enhancing your credibility in the market.
A phased approach is often adopted: launch with a host FMC for speed, while preparing to obtain a licence for long-term benefits. This approach allows you to start operations quickly, build a track record, and demonstrate your fund's viability to potential investors, while also working towards gaining full control and credibility through your own licence.
Do You Always Need Tax Incentives?
Singapore offers tax incentive schemes (Sections 13O/13U) that exempt specified income from tax. These schemes can significantly reduce the tax burden on your fund, but they come with certain conditions, such as minimum AUM requirements, local business spending, and staffing thresholds.
Not every fund needs to apply at launch. Many managers set up a VCC without incentives for speed and cost efficiency, leaving the option to apply later once scale and investor profile justify it.
Conclusion
The Singapore VCC offers an ideal balance of flexibility, governance, and efficiency for managers looking to establish funds with regional or global reach. It is adaptable for both first-time fund launches and institutional-grade platforms, making it a structure worth considering for anyone planning to raise and manage capital from Singapore.
"Interested in exploring Singapore as a fund hub? Contact Angel Services to learn how the VCC can be tailored to your needs."