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Balancing access and protection: MAS' proposed regulatory framework for retail private market investment funds

Private markets have experienced strong demand and have grown considerably as an asset class in recent years. According to McKinsey’s Global Private Markets Review 2024, private markets’ assets under management totalled US$13.1 trillion as of mid-2023, after growing at nearly 20% per annum since 2018.

With such strong demand from investors, it is not surprising that regulators of various financial centres have been exploring ways to offer such products and exposure to investors. On 27 March 2025, the Monetary Authority of Singapore (MAS) published a consultation paper proposing a Long-term Investment Fund (LIF) framework – comprising two different fund structures and three categories of requirements – to govern retail access to private market investment funds, with the intention of facilitating more investment choices for retail investors. 

In this update, we set out an overview of the proposed framework and a summary of some of the potential key terms, such as the requisite manager expertise, scope of permissible investments and product warning disclosures. Fund management companies seeking to offer retail private market investment funds should ensure that these requirements are met and provide the necessary training to their staff.   

Please do not hesitate to reach out to us (contact details below) or your regular Herbert Smith Freehills Kramer contact if you require further guidance on the new framework.

The current regulatory landscape

Private market investment assets generally include private equity, private credit, real estate and infrastructure. MAS has observed that retail investors currently have limited access to private market investments, as regulatory requirements do not allow for the authorisation of a collective investment scheme that primarily invests in private market investments. Furthermore, due to the illiquid nature of private market investments, funds that invest primarily in private market assets may not be able to comply with certain existing fund requirements. 

A new regulatory framework is therefore needed to promote the growth of a stable and resilient market for retail private market investment funds while providing safeguards for retail investors who wish to diversify their investment portfolios.

The proposed LIF framework

Under the LIF framework, MAS has proposed two potential fund structures to cater to different investor preferences:

  1. a Direct Fund structure – a fund structure that makes direct private market investments and allows for greater visibility of the underlying assets; and
  2. a Long-term Investment Fund-of-funds (LIFF) structure – a fund structure which primarily invests in other private market investment funds, and therefore benefits investors who wish to leverage the LIFF manager's expertise in selecting and monitoring a diversified portfolio of private market investment funds.

MAS has also proposed and is seeking feedback on specific regulatory requirements for Direct Funds and LIFFs. These requirements have been broadly grouped into manager, product and disclosure requirements, and we have set out some of the key requirements in the table below. 

 Direct Funds LIFFs
Manager requirementsManager expertiseManager should be a retail licensed fund management company (LFMC) with a track record and experience managing the relevant private market investments.

Manager must:

  1. be a retail LFMC;
  2. with its related corporations, manage at least S$1 billion of the relevant private market investments; and
  3. have at least 3 full-time representatives who are resident in Singapore and each have at least 5 years of experience in managing private market investments.
Product requirementsProduct differentiationThe scheme should contain the term "LIF" or "Long-term Investment Fund" in its name.
Investment strategy and permissible investments 

Investments to be limited to:

  1. private equity companies that meet criteria such as having a minimum valuation, gross revenue, and operating track record;
  2. private credit investments that are senior, backed by collateral such as income-generating real assets, subject to protective covenants or issued to profitable companies of a certain size and gearing limit; or
  3. infrastructure assets that are income-generating brown-field assets.

Other permissible liquid investments (Liquid Investments) include:

  1. transferable securities;
  2. money market instruments;
  3. eligible deposits;
  4. units in other collective investment schemes under paragraph 1.4 of Appendix 1 of the CIS Code that are listed for quotation and traded on an organised exchange or redeemable on a daily basis; and
  5. financial derivatives for the purposes of hedging existing positions or efficient portfolio management provided that these are not used to gear the overall portfolio. 

Investments to be primarily in unlisted private market funds that meet the following conditions:

  1. the investment strategy and approach must reflect that the underlying private market investment (PMI) funds are or will be primarily invested in long-term, illiquid assets;
  2. the underlying private market investment assets are directly managed by a manager separate from the LIFF manager; and
  3. the underlying PMI funds have other investors.  

 

The LIFF may also invest up to one-third of its net asset value in:

  1. Liquid Investments; and
  2. co-investments, i.e. investments that the LIFF invests in alongside its underlying PMI fund(s).

 

Redemption requirements 

For unlisted Direct Funds:

  1. the manager should offer to redeem units at least once a year;
  2. at least a portion of the fund's total assets should be offered annually; and
  3. redemption requests should be paid to investors within 90 days from the dealing day the redemption request is accepted.

For listed Direct Funds, it can be closed-end without a redemption policy. Listing rules under the Singapore Exchange (SGX) would apply.

For unlisted LIFFs:

  1. offer to redeem units/shares at least once a year;
  2. at least 10% of the fund's total assets should be offered annually; and
  3. redemption requests should be paid to investor within 90 days from the dealing day the redemption request is accepted.

For listed LIFFs, it can be closed-end without a redemption policy. Listing rules under SGX would apply.

 

Disclosure requirements Product warning 

Product risk warning statements should include the following:

  1. the LIF invests in assets that may take a long time to buy or sell, and it may only increase in value after a long time;
  2. (for unlisted LIF) you should be prepared to hold the investment for a long time. If you decide to exit, it will take a while for you to get your money back; and
  3. (for listed LIF) you may not always be able to sell your investment or sell at a price that reflects its value.
Product highlights sheet (PHS)MAS is seeking views on what information particular to Direct Funds should be highlighted.

The PHS should highlight:

  1. the illiquid nature of the underlying investments;
  2. for unlisted LIFFs, the redemption terms and the risk that an investor is unable to sell his investment readily and that there are limitations to redeeming his investment; and
  3. for listed LIFFs, details of the listing, and the risk that the investor will have no right to redemption and that the listing of the LIFF does not guarantee a liquid market for his investment in the LIFF.
Prospectus and periodic reports requirementsSimilar disclosure requirements for prospectus and periodic reports as LIFFs, but modified to fit the characteristics of direct private market investments. 

Prescribed disclosures for the prospectus include the track record of the LIFF manager and manager(s) of the underlying PMI funds, the leverage policy of the LIFF, the LIFF's liquidity risk management and valuation methodology.

Prescribed disclosures for periodic reports include policies to mitigate conflicts of interest, leverage policy, details of new transactions and details of the top 10 underlying assets of the LIFF.


Global horizon

The MAS' proposal keeps Singapore's financial sector in step with global developments that enhance retail access to private market investments through regulatory frameworks. 

One example is the Long-Term Asset Funds (LTAF) in the United Kingdom. LTAFs are open-ended funds authorised by the Financial Conduct Authority that invest in long-term, illiquid assets. LTAFs have a number of features that are currently being considered by the MAS, such as asset focus, manager requirements, liquidity management requirements, product requirements and disclosure requirements.

Similar to LTAFs, this new proposal by the MAS promises exciting opportunities to retail investors to expand their investment portfolios while providing greater access to capital for the wider economy. At the same time, given the nature of private market investments, a balance needs to be struck to ensure that the retail investors have sufficient knowledge and understand the relevant risks of such investments. 

Key contacts

Kwah Chee Hian photo

Kwah Chee Hian

Director, Head of Financial Services Regulatory

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Legal Notice - Singapore

The contents of this publication, current at the date of publication set out above, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.

Herbert Smith Freehills Kramer LLP is licensed to operate as a foreign law practice in Singapore. Where advice on Singapore law is required, we will refer the matter to and work with licensed Singapore law practices where necessary.

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