The 65% Threshold: Retail Investors Gravitate to Low-Cost Funds
In 2024, 65% of net new retail fund flows in Singapore were captured by offerings in the lowest-cost quartile, marking a decisive structural shift toward cost-conscious investing in the city-state’s fund industry. The magnitude of this concentration reflects a deepening preference for low-fee products among retail investors, who directed the majority of their incremental capital to the most competitively priced funds even as the overall market expanded significantly.
Singapore’s total assets under management (AUM) grew 12% to S$6.07 trillion in 2024, while net inflows jumped 50% year-on-year to S$290 billion, according to the Monetary Authority of Singapore’s annual asset management survey. The wealth management ecosystem has broadened substantially: the number of family offices in Singapore rose from approximately 400 in 2020 to over 2,000 in 2024, reflecting the deepening pool of sophisticated capital seeking Singapore-based investment solutions. Against this backdrop of rapid AUM accumulation, the fact that nearly two-thirds of new retail flows landed in the cheapest quartile signals that cost has become a primary decision filter rather than an afterthought.
Scale-Driven Cost Advantages in Singapore's Fund Industry
Singapore’s expanding AUM base — S$6.07 trillion in 2024, up 12% — provides the underlying economies of scale that allow fund managers to compress fees while maintaining margins. Cross-border wealth inflows have accelerated: Boston Consulting Group’s Global Wealth Report 2025 ranked Singapore among the fastest-growing global financial centres in 2024, with inflows arriving from China, India, Southeast Asia, and increasingly the Middle East. This external capital pool deepens the addressable market, enabling fund managers to amortise fixed costs across larger asset bases and pass savings to investors.
Billionaire wealth in Singapore rose 66.4% to US$258.8 billion in 2025, and the city is now home to 55 billionaires, according to UBS’s Billionaire Ambitions Report published in December 2025. This concentration of ultra-high-net-worth capital, combined with the broader AUM growth, creates a feedback loop: larger fund complexes achieve lower expense ratios, attract more inflows, and further widen their cost advantage over smaller competitors. The 65% flow concentration is therefore not merely a behavioural preference — it is a structural outcome of market scale that entrenches the largest, lowest-cost providers.
Safety Seeking in a Volatile Environment
Retail investors in 2024-2025 have prioritised safety over returns, a preference that naturally aligns with low-cost, passive-like products. The second quarter of 2025 saw net fund flows surge 86% quarter-on-quarter to S$4.1 billion, with nearly 60% — S$2.8 billion — flowing into money market funds, according to FundSingapore and Morningstar data reported by The Asset. Fixed income funds attracted S$918.7 million in Q2 2025, while equity funds registered just S$80.9 million, a steep drop from S$397 million in the prior quarter.
Exhibit
Breakdown of Net Fund Flows in Singapore by Asset Class, Q2 2025
Money market and fixed income funds captured over 90% of inflows.
Source: Orionmano Industries
This risk-off posture extends to direct equity holdings. Retail investors have been net buyers of approximately S$17 billion in Singapore stocks since the end of 2019, providing a steady domestic source of demand, according to Singapore Exchange data. The behaviour is consistent with price-sensitive participation: retail investors tend to buy after market falls and trim exposure after rallies, making their flows supportive rather than directional.
Implications for Fund Managers and Market Structure
The low-cost trend carries significant competitive implications for fund managers operating in Singapore. Retail net buying in 2025 reached S$2.6 billion, concentrated in banks and REITs, indicating yield-seeking behaviour within a broadly cautious allocation framework, according to SGX data published in January 2026. This pattern — preference for low-cost passive vehicles alongside selective direct exposure to dividend-yielding stocks — suggests that active managers charging above-quartile fees face persistent headwinds unless they can demonstrably deliver risk-adjusted outperformance.
The structural tilt will likely intensify. Beginning in 2028, Singapore’s Central Provident Fund (CPF) will offer a panel of simplified, low-cost equity investment schemes, according to OCBC equity research published in April 2026. While the specific scheme parameters have yet to be defined, the policy direction is unambiguous: CPF members will gain access to state-facilitated, fee-conscious equity investment options, channelling additional long-term capital into low-cost products and further entrenching the scale-driven advantages of the largest fund managers. Retail participation supports liquidity and stability in Singapore’s equity markets, though institutional and foreign flows still set overall market direction during periods of macroeconomic stress, as noted by analysts cited in Singapore Business Review.
For fund managers, the implication is stark: compete on cost, achieve sufficient scale to sustain low fees, or risk being marginalised in the retail distribution channel. The 65% threshold from 2024 is not an outlier — it is the leading edge of a market structure where cost efficiency increasingly determines capital allocation in Singapore’s retail fund industry.
