MAS Removes 5% Precious Metals Cap: What It Means for Singapore Family Offices

Singapore has removed the 5% cap on physical investment precious metals under its fund tax incentive framework, giving family offices and funds greater flexibility in how qualifying portfolios are constructed.

The change was formalized in Monetary Authority of Singapore Circular FDD Cir 05/2026, issued on 31 July 2026, and took effect from 1 August 2026. While the immediate change concerns physical investment precious metals, generally shortened to IPMs, its significance for Singapore family offices is broader. It removes a constraint that could previously influence portfolio construction where families sought to maintain their investments within the Designated Investments framework applicable to the relevant tax incentive.

What Has Changed

Physical IPMs fall within Singapore’s Designated Investments framework for the relevant fund tax incentive schemes. Before 1 August 2026, physical IPMs were subject to a 5% limit. Where a fund held physical IPMs exceeding 5% of its total investment portfolio, the excess was not treated as a Designated Investment. MAS has now removed that cap. From 1 August 2026, qualifying physical IPMs are no longer subject to the previous 5% portfolio ceiling for Designated Investment purposes.

The change applies within the fund tax incentive framework under Sections 13D, 13O, 13OA and 13U of the Income Tax Act, including the relevant incentive arrangements used by single family office funds, generally shortened to SFOs.

Why This Matters for Family Offices

The significance is not simply that a family office can now hold more physical gold. Family office portfolios can differ materially from conventional institutional portfolios. A family’s allocation may reflect long term objectives around capital preservation, intergenerational wealth, diversification, liquidity, currency exposure, and protection against particular economic risks.

For a family with an investment conviction in physical precious metals, the previous 5% limit could create an additional consideration, namely whether to maintain the desired allocation and potentially have part of it fall outside Designated Investment treatment, or constrain the allocation around the tax incentive requirements. Removing the cap reduces that tension. A family office can now determine its allocation to qualifying physical IPMs without the previous 5% Designated Investment ceiling being a determining factor. This does not create an investment case for gold, nor does it mean family offices should increase their precious metals exposure. Instead, it gives families greater room to allow their investment strategy, rather than a particular tax threshold, to determine the appropriate allocation.

An Opportunity to Revisit Portfolio Construction

For existing Singapore family offices, the change provides an opportunity to review whether current portfolio allocations continue to reflect the family’s intended investment strategy. Where physical precious metals have historically been maintained below 5%, one consideration may be whether that allocation represented the family’s preferred investment position or was influenced by the previous Designated Investment restriction.

Separately from the removal of the physical IPM cap, the 31 July 2026 MAS circular introduced a broader package of refinements to certain conditions applicable to SFO funds, including changes relating to assets under management in Designated Investments, local business spending, and the Capital Deployment Requirement. For SFO funds to which the revised assets under management conditions apply, compliance is assessed at specified testing points, including at application and at the end of the relevant basis period, rather than through continuous monitoring. The Capital Deployment Requirement framework has also been streamlined, and local business spending requirements revised for relevant SFO incentive awards.

Importantly, these changes do not apply identically to every existing SFO. Their application and timing depend on factors including when the incentive was awarded and the conditions applicable to the particular SFO fund. For existing family offices, the appropriate starting point is therefore the conditions of their particular incentive award, rather than assuming that every element of the revised framework automatically applies from 1 August 2026.

Greater Flexibility, But Substance Still Matters

The changes should not be interpreted as removing the substantive conditions associated with Singapore’s SFO fund tax incentive framework. Depending on the relevant incentive, the date of the award, and the conditions applicable to it, SFO funds must continue to consider requirements relating to assets under management in Designated Investments, investment professionals, local business spending, capital deployment, and other applicable conditions.

What Should Family Offices Consider

For families already operating or considering establishing an SFO in Singapore, the changes provide an opportunity to consider several practical questions.

• Does the current precious metals allocation reflect the family’s intended investment strategy, or has it been influenced by the previous 5% Designated Investment cap?
• How would a different allocation affect the overall composition of the SFO’s Designated Investments?
• Which conditions apply to the SFO’s particular tax incentive award?
• Do the revised assets under management, local business spending, or Capital Deployment Requirement conditions apply to the SFO, and if so, from when?
• Are qualifying physical IPM holdings appropriately documented and reflected in the SFO’s investment and compliance records?
• More broadly, does the portfolio remain aligned with the family’s long term investment objectives while continuing to satisfy the applicable incentive conditions?

These considerations extend beyond precious metals. For family offices, investment strategy, tax structuring, governance, and operating substance are interconnected and should be considered as part of the overall family office framework.

A Broader Direction for Family Capital

The removal of the 5% physical IPM cap is a targeted change, but its significance is broader. Family capital is often managed across generations and asset classes, with objectives that can differ materially from those of conventional investment vehicles. Greater flexibility in portfolio construction can therefore be particularly relevant to family offices.

The latest change provides families with more room to determine an appropriate allocation to qualifying physical precious metals without the previous 5% Designated Investment threshold becoming a determining factor. At the same time, Singapore continues to place emphasis on substance, investment professional requirements, local business spending, and capital deployment.

For family offices, the practical takeaway is therefore not simply that a greater allocation to qualifying physical IPMs can now fall within the Designated Investments framework. It is that the investment portfolio and the family office structure should be considered together, with tax incentive requirements supporting, rather than unnecessarily shaping, the family’s longer term investment objectives. For existing SFOs, this may be an appropriate time to review whether the investment, governance, and operating framework remains aligned with both the family’s objectives and the conditions applicable to its tax incentive award.

This article is provided for general informational purposes only and does not constitute investment, legal, or tax advice. The application of Singapore’s fund tax incentive schemes depends on the relevant incentive, the date and terms of the applicable award, and the circumstances of each structure. Family offices and fund vehicles should refer to the applicable MAS requirements and obtain advice from us or appropriate professionals before making changes to their investment, tax, or compliance arrangements.