Private bank UBP rolls out VCC fund with S$200 million in commitments

The fund will invest in fixed-income strategies; a second fund to be launched next year will invest in a hedge fund of funds.

Private bank Union Bancaire Privee (UBP) is launching its first fund under Singapore’s variable capital company (VCC) framework.

The fund will invest in fixed-income strategies and has already attracted commitments of S$200 million, said Guy de Picciotto, UBP’s chief executive.

A second fund is expected to launch next year, investing in a hedge fund of funds, and has commitments of an estimated S$50 million.

Under a VCC structure, investments are segregated, unlike in a mutual fund. Subfunds can also be created to invest on behalf of clients’ family members. UBP has set the minimum investment amount at US$20 million.

De Picciotto said: “VCC is a big step forward for us. With Singapore being a key global financial hub renowned for its stability, strong regulations and strategic location, we’re in a great position to attract and manage wealth in one of the most trusted financial centres in the world.

“(The VCC structure) is quite similar to what we see in places like Luxembourg and other markets, where funds are often set up for families or individuals. It is a strategic and valuable addition to our range of tools and products, and we’re excited about the opportunities it brings.

“The driving force behind this initiative has been our clients. Some of them specifically asked for a Singapore-domiciled fund structure, and we wanted to deliver on that.”

Guy de Picciotto, Chief Executive Officer

He is confident that total assets under its VCC funds could reach S$2 billion in a couple of years. “What’s particularly exciting is the growing interest we’re seeing – not just from Asia, but also from Europe and the Middle East. It’s clear that we’re meeting a real need in the market, and that’s incredibly encouraging.”

De Picciotto said the bank’s Asia business has doubled in the last decade. The constraint, however, is the scarcity of experienced bankers.

This year, UBP acquired two private banking units from Societe Generale – SG Kleinwort Hambros, which is focused on the UK, and Societe Generale Private Banking (Switzerland). The deals are expected to add 25 billion Swiss francs (S$40.3 billion) to UBP’s assets under management, which stood at around 171.7 billion Swiss francs at end-June.

UBP’s discretionary portfolio management team in Singapore will lead the investment strategy for the VCC funds, and clients can access a wide range of asset classes, including traditional equities and fixed income, as well as alternative investments.

The bank is also collaborating with third-party asset managers to provide a broader selection of investment opportunities.

The VCC structure supports legacy planning in a few ways. It helps, for instance, to simplify succession planning as the efficient transfer and redemption of sub-fund shares can minimise probate complexities and potential disputes. It enables continuity of management across generations, and is also easily integrated with trusts and enables control over wealth distribution.