12 Jun 1998... In tandem with the revised investment guidelines for CPF unit trusts announced by the Minister for Manpower on 20 May 98, the Monetary Authority of Singapore has reviewed the investment guidelines for non-CPF or cash unit trusts. The following changes have been adopted:-
Regular Savings Plans (RSPs)
The current requirement for a minimum on-going investment amount before RSPs can be offered to investors will be removed. Fund managers will decide, on a commercial basis, whether they want to offer RSPs and their structure. Investors will also be able to decide, within the structure offered by the managers, on the amounts they want to invest initially and subsequently.
Investment Guidelines and Borrowing Limits
the current two-tier regulatory structure based on a minimum initial subscription and holding of either $1,000 ($1,000-funds) or $5,000 will be collapsed into one. At the same time, the current restrictions on the markets where $1,000-funds may invest will be removed. This will allow fund managers the flexibility to diversify their investments and maximise risk-adjusted returns.
the following prudential requirements, which hitherto only applied to $1,000-funds, will apply to all cash unit trusts irrespective of their minimum initial subscriptions and holdings:-
investment in unlisted securities not to exceed 10% of the funds' value;
investment in metals (other than gold 1 ), commodities and infrastructure projects disallowed; and
borrowings not to exceed 25% of the funds' value.
investment in derivatives will be relaxed such that the unit trust may invest up to 15% of its value for non-hedging purposes while the amount of investment for hedging will continue to be unrestricted.
With immediate effect, all new and existing cash unit trusts may offer RSPs based on the revised guidelines and are not restricted in the markets they can invest in. The revised prudential requirements outlined in paras 1(c) and (d) take immediate effect for new unit trusts, while existing unit trusts are given 6 months to comply.
A Handbook on unit trusts is jointly issued by the Authority and the Registrar of Companies and Businesses (RCB). It will provide easy reference to industry practitioners on the legal requirements as well as the administrative guidelines for the marketing and operation of unit trusts. The Handbook is available from today on the MAS and RCB websites.