In May 2026, the Monetary Authority of Singapore (MAS) published an information paper on risk management practices for fund management companies (FMCs). It does not introduce new rules. It draws on findings from thematic inspections and describes, in detail, what good practice looks like and where firms fall short. Its findings are drawn from inspections across equity, fixed income, hedge, private credit and fund-of-funds strategies, and many of the shortcomings MAS identifies are not exotic. They are the everyday gaps that appear when a framework exists on paper but is not consistently applied or recorded.
Five areas, one underlying theme
The paper is organised around five areas: governance, policies and procedures, new fund launches and changes to existing funds, investment due diligence, and ongoing monitoring of investments. Read together, a single theme runs through them. The MAS expects the people overseeing investment risk to be independent of the people taking it, and it expects firms to be able to demonstrate that their controls work.
Some of the examples are instructive. One manager of a private credit fund rolled over and extended credit to a borrower for almost two years without conducting a single credit review, relying only on the borrower’s repayment history. Another reclassified overdue loans as performing immediately after restructuring them, without first monitoring repayment against the revised schedule. In several cases, compliance with risk limits and investment restrictions was monitored by the portfolio managers themselves rather than by an independent function. These are failures of process and oversight rather than of investment judgement, and they are precisely the kind of thing an independent review is designed to catch.
Independence is the recurring expectation
The clearest message in the paper concerns independence. The MAS expects investment and risk monitoring to be carried out by functions independent of portfolio management, and it expects committees that approve investments or changes to a fund to include members from outside the front office, with proper representation from support functions such as operations, legal and compliance. Where a committee lacked that representation, MAS noted the risk of incomplete consideration of the operational, regulatory and compliance implications of a decision.
This is where smaller firms face a practical difficulty. A boutique manager rarely has the headcount to separate every function cleanly, and the MAS acknowledges as much. The paper is explicit that firms may take a risk-based and proportionate approach, sized to the nature and complexity of their business. It is equally explicit about what should happen where full segregation is not possible: any conflict of interest should be mitigated and, where appropriate, disclosed, and smaller firms could engage external service providers, including external auditors, to carry out regular independent assessments of their investment and risk management practices. The regulator, in other words, treats independent external review as a legitimate way to meet an expectation that internal resource alone cannot.
If it is not documented, it did not happen
The second theme is evidence. A large share of the findings come down to record-keeping: committee minutes that were brief or absent, no record that monitoring reports had been reviewed, deviations from policy that were never justified in writing, and assessments of new funds approved verbally. The underlying expectation is consistent across all five areas. A framework needs to exist, to operate in practice, and to be capable of being demonstrated after the fact to the regulator, the board and investors. Here, documentation is the evidence that oversight actually took place.
What this means in practice
For an established manager with a deep second line of defence, the paper is a useful benchmark against which to test existing arrangements. For a boutique or mid-sized firm, it is more pointed. Although the MAS endorses a risk-based and proportionate approach, it expects all fund management companies to identify all relevant risks, ensure sufficient independence in their management, and maintain respective records. It has told firms to identify gaps and address them through specific remediation.
This is the work that Alpadis’ Regulatory Compliance Services division in Singapore does for financial institutions, including fund management companies, external asset managers and other boutique firms. An independent internal audit can assess whether a risk management framework, the governance around it and the controls over the investment process are designed and operating in line with the paper’s expectations, and can identify where documentation or segregation of duties falls short. Ongoing compliance support helps keep policies current, escalation procedures workable and the audit trail in order between inspections. For firms without a large in-house compliance team, independent assurance is a practical route to benchmarking against the paper and showing MAS that any gaps have been closed.
The paper is worth reading in full, and it sets a clear direction. Firms that treat it as a benchmark to test themselves against, rather than a document to file, will be in a stronger position when the MAS next comes to call.
