MAS Information Paper on Risk Management Practices for Fund Management Companies (29 May 2026)

This information paper sets out MAS’ supervisory expectations for effective governance structures, frameworks, policies and procedures, and controls for overseeing and managing the FMCs’ investment process. The paper provides examples of good practices and areas for improvements. Fund Management Companies (FMCs) can adopt a risk-based and proportionate approach, considering the size, scale and complexity of their business and the types of funds managed. Gaps identified should be promptly addressed through specific remediation/enhancement measures.

1. Governance
   • Board and senior management (BSM) approves and put in place a sound risk management framework that covers and caters to the different types of funds/assets managed. Any exclusion should be properly justified and documented.
   • Conflicts of interest (COI) measures are appropriate, effective and consistently applied to safeguard the interests of investors. For smaller FMCs where proper segregation of duties may not be possible, mitigating measures should be taken (eg. conduct regular independent assessments) and where appropriate, disclose COI to investors.
   • Individuals appointed to oversee support and risk functions possess sufficient stature to effectively discharge their responsibilities.
   • Dedicated committee(s) has formal Terms of Reference (ToR) that clearly outline its responsibilities, composition, meeting frequency, quorum requirements and reporting line(s) for proper accountability.
   • Composition of committee(s) has appropriate representation from key support functions to provide the necessary challenge to portfolio managers.
   • Discussions at committee meetings are sufficiently documented for proper record keeping and accountability.
2. Policies and Procedures (P&Ps)
   • Relevant P&Ps are in place prior to launching new funds. Fixed frequency for regular reviews and triggers for ad-hoc reviews should be specified to ensure changes to practices are updated on a timely basis.
   • Roles and responsibilities of various parties involved in the different processes are clearly specified in the P&Ps.
   • Clear guidance is provided on how to deal with any deviations from approved P&Ps, including requiring all deviations to be adequately justified, properly documented and approved.
3. New Fund Launches and Changes to Existing Fund
   • All relevant factors are adequately assessed prior to a new fund’s launch or when there are deviations from the fund’s intended investment strategy or objective, post launch.
   • All documents provided to investors or disseminated to the public accurately reflect the fund’s structure and strategy, financial information, risks, redemption terms and governance arrangements at all times.
   • Proper record of assessments, discussions and/or approvals concerning new fund launches or changes to existing funds are appropriately maintained.
4. Investment Due Diligence
   • Perform adequate due diligence on potential investments to ensure that they are authentic and suitable. This includes evaluating whether the investment’s projected return-risk profile is reasonable and, where possible, superior to comparable opportunities, considering the fund’s investment objectives, strategy and restrictions.
   • Perform adequate due diligence on credit risk mitigation measures adopted for private credit funds, including evaluating the quality/strength of collateral and guarantee (as relevant) and their enforceability to ensure they are effective in managing default risk and mitigating potential losses.
   • Assess the experience and expertise of third-party fund managers and their key staff, as well as the adequacy of their governance structures, when partnering with them to co-invest or when investing into third-party managed funds.
   • Implement controls to ensure consistency in due diligence assessments and ensure that the assessments of selected investments are well substantiated and documented.
5. Ongoing Monitoring of Investments
   • Independent monitoring of performance and risks at suitable intervals which are supported by appropriate metrics and thresholds to enable early intervention.
     
   • Appropriate risk monitoring mechanisms are put in place and effectively adhered to, taking into account the nature of the assets managed and the risks assumed.
     
   • Deviations from agreed risk parameters should be duly acknowledged/approved by the relevant approving authority.
     
   • Information provided to investors accurately reflect the current state, nature and types of risks borne by the fund, to ensure a clear understanding and enable informed decision making.
     
   • Ongoing monitoring measures, including follow-up actions taken, are properly documented and judiciously maintained.
     
     
     

For the full details, refer to https://www.mas.gov.sg/publications/monographs-or-information-paper/2026/risk-management-practices-for-fund-management-companies

Disclaimer: The information, views or opinions expressed are provided for general information and should not be relied upon as legal or professional advice.