- Accredited investors (AIs) access more financial products than retail investors; AI-only products may improve returns, bring diversification benefits
- There is less regulatory protection for AIs as they are assumed to be better informed and able to manage the risks involved
- For more information, contact Endowus Private Wealth for a consultation
Who are accredited investors?
Most non-professional individual investors, generally known as retail investors, are restricted from accessing some types of investments that are exempt from certain regulatory requirements.
This is to protect retail investors from the risks associated with such products, which include alternative assets such as private equity, infrastructure, or hedge funds. The idea is that the average individual may lack the experience or capital to fully understand and handle all the risks involved.
Accredited investors (AIs), however, have been assessed to have the financial means and the know-how. These affluent individuals are therefore able to access a wider suite of financial products and services, as compared with retail investors.
Regulators in different countries have their own definitions of AIs and qualifying criteria, which often include income, professional experience, and net worth requirements.
In Singapore, the Securities and Futures Act defines AIs as individuals whose:
- Financial assets, net of any related liabilities, exceed $1 million (or its equivalent in a foreign currency); or
- Income in the preceding 12 months is not less than $300,000 (or its equivalent in a foreign currency); or
- Net personal assets exceed $2 million (or its equivalent in a foreign currency), of which the value of the individual’s primary residence (net of any secured loan) can only contribute up to $1 million.
If you fulfil at least one of these three conditions, you may choose to be deemed as either an accredited investor or a retail investor.
The Monetary Authority of Singapore (MAS) introduced the opt-in regime in 2019 so that investors must specifically give their consent if they want to be regarded as accredited.
A person who has chosen to be treated as an AI can withdraw their consent at any time, by giving written notice, if they change their mind.
Benefits of being an accredited investor
You may be wondering whether it’s worth opting in for the AI status, and whether it will be suitable for you.
Many investment products are only available to accredited investors. These include certain alternative assets, some bonds, and structured notes. Having access to a wider variety of investments can help with building a better-diversified portfolio and potentially achieve greater returns.
Endowus has a private wealth arm that provides access to more investment products such as alternative investments, many of which are only available to accredited investors.
For example, AI clients at Endowus can directly access institutional share classes of funds that were previously only available to large institutional investors. This means lower fees and higher expected returns.
AIs can also construct investment portfolios that are denominated and/or hedged in major currencies, such as the SGD, USD, EUR, and GBP.
What to know before opting in as an accredited investor
Regardless of your net worth, all investors should give careful thought to all investment opportunities and remember that all investments carry risk. In particular, AI-only products tend to have less regulatory oversight and require a bigger financial commitment upfront.
Importantly, being treated as an AI means that you are expected to have more knowledge, and are able to understand and manage the risks of the financial products you choose to invest in.
Accredited investors are assumed to be better informed and better able to access resources to protect their own interests, and therefore require less regulatory protection.
Investors who agree to be treated as AIs thus forgo the benefit of certain regulatory safeguards. For example, issuers of securities are exempted from issuing a full prospectus registered with MAS for offers that are made only to AIs, and intermediaries are exempted from a number of business conduct requirements when dealing with AIs.
Investors should consult a professional adviser if they do not understand any consequence of being treated as an AI.
For more information before you opt in to become an accredited investor, refer to this notice on Endowus.
With Endowus Private Wealth (EPW), clients looking to invest a minimum of S$1 million in assets across our services can gain exclusive access to more personalised solutions and products.
Let us introduce you to a better way to manage your wealth. For more information or to explore the options available to AIs, please contact us for a consultation.
To apply to become an AI, you may complete the accredited investor opt-in form accompanied with the relevant supporting documents. Once processed and verified, your investor status will be changed to reflect your AI status.
Investment involves risk. Past performance is not necessarily a guide to future performance or returns. The value of investments and the income from them can go down as well as up, and you may not get the full amount you invested. Rates of exchange may cause the value of investments to go up or down. Individual stock performance does not represent the return of a fund.
Any forward-looking statements, prediction, projection or forecast on the economy, stock market, bond market or economic trends of the markets contained in this material are subject to market influences and contingent upon matters outside the control of Endow.us Pte. Ltd (“Endowus”) and therefore may not be realised in the future. Further, any opinion or estimate is made on a general basis and subject to change without notice. In presenting the information above, none of Endowus Pte. Ltd., its affiliates, directors, employees, representatives or agents have given any consideration to, nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Therefore, no representation is made as to the completeness and adequacy of the information to make an informed decision. You should carefully consider (i) whether any investment views and products/ services are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances. You may also wish to seek financial advice through a financial advisor or the Endowus platform and independent legal, accounting, regulatory or tax advice, as appropriate.
Investment into collective investment schemes: Please refer to respective funds’ prospectuses for details of the funds, their related fees, charges and risk factors, The listing of units of the fund on a stock exchange does not guarantee a liquid market for the units. Before making an investment decision, you are reminded to refer to the relevant prospectus for specific risk considerations.
For Cash Smart Secure, Cash Smart Enhanced, Cash Smart Ultra: It is not a bank deposit and not capital guaranteed, and is subject to investment risks, including the possible loss of the principal amount invested. Investment products are not insured products under the provisions of the Deposit Insurance and Policy Owners Protection Schemes Act 2011 of Singapore and are not eligible for deposit insurance coverage under the Deposit Insurance Scheme. Interest rates are indicative and subject to change at any time.
Product Risk Rating: Please note that any product risk rating (the “PRR”) provided by us is an internal rating assigned based on our product risk assessment model, and is for your reference only. The PRR is subject to change from time to time. The PRR does not take into account your individual circumstances, objectives or needs and should not be regarded as advice or recommendation to purchase, hold or sell any fund or make any other investment decisions. Accordingly, you should not solely rely on the PRR in making your investment decision in the relevant Fund.
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