Fund Managers Weigh Singapore VCCs vs Cayman Islands

Choosing where to set up your fund is a vital decision that could shape its future trajectory. For decades, the Cayman Islands dominated that choice, but a growing number of fund managers are now looking to the Singapore VCC (Variable Capital Company) framework.

Here’s why fund managers are rethinking Cayman and turning toward Singapore VCCs as a more strategic long-term solution.

Overview of Singapore VCC

Launched in 2020, Singapore’s VCC framework is more than just a new vehicle—it’s a rethink of how investment funds can be structured for both compliance and efficiency.

Designed to cater to both open-ended and closed-ended funds, VCCs offer the flexibility fund managers crave without sacrificing the regulatory backbone investors expect.

At the heart of it: sub-fund segregation. A VCC can house multiple sub-funds under a single legal entity, each with its own assets, liabilities, and strategies, creating legal ring-fencing between them.

As of May 2025, there are over 1,219 VCCs demonstrating solid growth, according to ACRA. This level of adoption, just four years since launch, speaks volumes.

A Quick Look at Cayman Islands SPCs

The Cayman Islands SPC (Segregated Portfolio Company) structure—introduced in 1998 via amendments to the Companies Act—has long been a cornerstone for private equity and hedge funds, offering similar sub-fund segregation.

According to CIMA, Cayman still leads with 30,038 registered funds as of August 15, 2024.

What makes the SPC so attractive? It’s all about asset protection. Within one legal entity, managers can create multiple segregated portfolios.

Each portfolio operates independently, with its assets and liabilities, meaning that if one goes under, the others stay insulated. This built-in legal separation is a key draw for investors who want to avoid risk cross-contamination.

Key Concerns Driving Reassessment of Cayman

The growing compliance demands and global scrutiny are reshaping the cost-benefit equation. New regulations like the Private Funds Law and Mutual Funds (Amendment) Law mandate:

• Annual audits by CIMA-approved auditors
• Valuations and custodians for asset oversight
• Increased reporting to comply with Economic Substance rules

This added compliance has ramped up operational complexity.

Even more pressing? Perception risk. Cayman’s removal from the EU tax blacklist and increased pressure from North American and European LPs to avoid so-called “tax haven” jurisdictions is making investors wary.

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Why Singapore VCCs are on the Rise

Let’s break it down:

✅ Regulatory Clarity

Singapore offers transparent rules, clear guidance from the Monetary Authority of Singapore (MAS), and straightforward compliance backed by the Inland Revenue Authority of Singapore (IRAS).

✅ Cost Efficiency

When it comes to launching a fund, cost isn’t everything, but it matters a lot.

• Singapore VCCs generally offer a more cost-effective setup. Legal and regulatory fees typically cost around US$40,000, which is considerably lower compared to offshore alternative Cayman SPCs, which often come with hefty legal and regulatory fees, up to US$100,000.

Compare that to rising compliance burdens in Cayman—audits, custodians, valuations—a growing cheese-grater for margins.

​​✅ Banking Made Easier

Opening a bank account—whether with traditional banks or new-age digital banks like Aspire—is typically more seamless for Singapore VCCs, thanks to the country’s pro-business financial infrastructure.

✅ Investor Confidence

With Singapore’s strong English common law-based legal system, robust regulatory regime, and political stability, institutional investors feel safer. VCCs offer onshore substance with global appeal—a key investor demand.

✅ Tax Advantages Without the Risk

Apart from no capital gains tax, Singapore offers:

• 100+ double-tax treaties
• Income earned by qualifying venture companies can be exempt from tax.
• Income derived from companies incorporated and residents in Singapore and funds managed by licensed fund managers in Singapore may qualify for tax exemption.
• Even broader, income generated from funds managed by a Singapore-based fund manager can be exempt from tax.

All without the reputational fog that offshore domiciles sometimes carry.

VCC vs Cayman SPC: At a Glance

The Future of Fund Domiciliation in Asia

With more fund managers looking east for growth and investor demand shifting toward transparency and regulation, Singapore is strategically positioned.

As Olivier Too, CEO of Auptimate, noted, “We’re seeing a major turning point. The VCC has redefined what onshore structuring looks like in Asia, offering institutional-grade compliance with the flexibility fund managers need to scale quickly.”

Add to that Singapore’s access to regional capital markets, a deepening pool of private wealth, and growing demand for onshore structuring, and it’s clear: the tide is turning.

Conclusion

Cayman isn’t going away, but Singapore proves to be a great contender.

Today, fund managers are thinking more about substance, reputation, and long-term adaptability. With the VCC, Singapore offers a compelling package: regulatory strength, tax efficiency, operational ease, and global legitimacy.

Are you thinking of launching a VCC or SPV in Singapore? Auptimate offers a digital-first SPV platform with turnkey solutions. Contact us at  info@auptimate.com.