A senior official from the Singapore government has set out how it wants to widen the range of investments open to the broad public.

A senior Singapore government policymaker has reiterated how the city-state is widening the range of investments open to retail investors, coming at a time when hunger for returns in a low-rate world remains a pressing issue with people preparing for retirement.

The Monetary Authority of Singapore and the city’s stock market will ease financial and administration costs for bond issuers seeking to tap the retail market, Josephine Teo, senior minister for finance and transport, said in a conference yesterday.

The stock exchange (SGX) has proposed a “bond seasoning framework”, under which eligible corporate issuers which satisfy certain criteria in relation to size, listing track record and credit profile will be able to re-size wholesale bonds into smaller lot sizes after a six-month seasoning period. These re-sized bonds can then be made available to retail investors via the secondary market on SGX. Eligible corporate issuers can also offer new bonds to retail investors under the same terms as the seasoned bonds without a prospectus, Teo said.

The MAS will create an “exempt bond issuer framework”, allowing issuers which satisfy more stringent eligibility criteria to offer bonds directly to retail investors without a prospectus.  Corporate issuers can offer retail bonds without incurring the expenses from publishing a prospectus.  Retail investors in turn can buy bonds directly from an exempt bond issuer at the onset, without having to wait six months for the bonds to be seasoned, she said.

Another move involves making it easier for retail investors to hold exchange traded funds. From April, the MAS will change a definition rule to allow fund managers to reclassify ETFs which make limited use of derivatives and therefore give retail investors more freedom to hold such instruments.

Teo reflected on how Singapore’s investment management industry has seen assets under management surge to more than $1.8 billion from $150 billion between the financial crisis year of 1998 and 2013.

“Recent trends give us reason to be optimistic. AuM continues to register strong growth, averaging about 10 per cent per annum from 2010 to 2013. More importantly, Singapore continues to consolidate its position as a pan-Asia asset management centre,” Teo said, noting that 77 per cent of industry AuM in 2013 was sourced from outside Singapore; and that 67 per cent of that money was invested in the Asia-Pacific region.

However, despite the rapid expansion of investments, most Singaporeans today put their money in bank deposits that offer lower but predictable returns with little risk, Teo said, highlighting the need for wider investment options.

Singapore’s government is introducing three initiatives to expand the range of simple, low-cost investment options available to individual investors: Improving the availability of corporate bonds to retail investors; enhancing retail access to exchange traded funds; and introducing a new Singapore Savings Bonds for local investors.

Commenting on the specific issue of corporate bonds, Teo said there has been a slow takeoff in availability of corporate bonds to retail investors because strong demand for quality corporate issuances from institutional and accredited investors – banks, financial institutions, asset managers and high net-worth individuals – reduces the need for corporates to tap the retail market for funds.

Another problem is that corporate issuers must meet certain disclosure requirements, such as publication of a prospectus, to sell bonds to retail investors. Although these requirements are meant to protect investors they can also slow down the issuer process and add to costs.