Brunei: Wealth Management
The Mutual Funds Order, 2001 ('MFO') applies to domestic and international funds and their promoters/managers/custodians. Provision is made for Public Funds, Private Funds and Professional Funds. Islamic Funds are provided for and are defined as funds which do not offend against the Religion of Islam. A Shari'ah Council must be appointed in respect of an Islamic fund. Mutual funds may be in the form of a body corporate, a unit trust, a limited partnership or other arrangement whereby participants (investors) may benefit from the pooling of funds, diversification and the spreading of risk. No bearer shares may be issued.
An increasing number of mutual fund providers are using the jurisdiction to register their (Brunei) collective investment schemes under the Mutual Funds Order.
The MFO provides 'for the regulation of mutual funds in Brunei Darussalam, the supervision and licensing of such funds and of persons promoting and providing services in connection therewith and for other matters relating to mutual funds'.
Provision is made for Public Funds, Private Funds and Professional Funds, Islamic Funds are specifically defined as funds which do not offend against the Religion of Islam.
Mutual Funds may be in the form of a body corporate, a unit trust, a limited partnership or other arrangement whereby participants (investors) may benefit from the pooling of funds, diversification and the spreading of risk. No bearer shares may be issued without the specific consent of the Minister.
No mutual fund may be established, domiciled, offered to the public, traded listed, managed or administered from within Brunei Darussalam unless it holds the appropriate licence or permission issued by the Authority.
Managers, administrators, custodians and trustees (together referred to as "operators") are required to be appropriately licensed or permitted. Trust companies licensed under the Registered Agents and Licensed Trustees Order, 2000 and appropriately licensed banks (domestic or international) are permitted operators.
Some banks in Brunei have begun to offer fixed income products. Standard Chartered Bank's Roop Barua said that the bond products have been very well received by clients, and that introducing the product to the Brunei market is the “right thing to do”.
“We are bringing it to the market in a responsible way, and I personally feel passionate about it,” he said. The investment bond products currently have a minimum investment amount of $50,000 in the respective foreign currencies and $250,000 in local currency.
“The products we are bringing in are mostly very high grade liquid bonds from around the world, covering multiple major currencies including the Singapore Dollar,” said Barua. The bank will also be bringing in various other currencies and that the kind of bonds that Standard Chartered Brunei brings in will depend on the demand from its client base. “For instance, if a client says that they have a lot of Australian Dollars that needs to be looked after, and needs it to be given the opportunity to invest, then we’ll bring in Australian Dollar bonds,” said Barua.
Barua said that during his visit to Brunei, he had noticed that most of the market base in Brunei is made up of mostly conservative investors. Bonds, he said, are “a very natural fit” for conservative investors. “Bonds in general are very conservative, because they have less risk than another asset class, so it would certainly fit in, but I would argue that bonds have a very natural fit with every client, because conservative clients will have more holdings but aggressive clients will also have bonds, but less in their portfolio,” he said.