Valuation and NAV in a VCC: independent valuation, hard-to-value assets, NAV cycles and the audit

The net asset value (NAV) of a VCC sub-fund is the value of its assets minus its liabilities, divided across its shares in issue, and it is the price at which investors subscribe, redeem or are reported to. MAS expects licensed fund managers to have assets valued independently, either by a third party or by an in-house function separated from the investment team, and it states that the annual audit alone does not meet that expectation (SFA 04-G05, para 4.1.2, revised 3 September 2025). This page explains the regulatory expectation, how NAV is built sub-fund by sub-fund, how hard-to-value assets are handled, and what the audit does and does not do.

What MAS expects on valuation

Paragraph 4.1.2 of MAS's Guidelines on Licensing and Conduct of Business for Fund Management Companies says a fund manager "shall ensure that assets under management are subject to independent valuation and customer reporting". It gives two routes:

The same paragraph adds that the annual audit "is meant to serve as a periodic check on the valuation of the assets", and that taken on its own it "will not fulfil the requirement for independent valuation". A fund therefore cannot rely on year-end audit adjustments as its valuation control.

Venture Capital Fund Managers are subject to a different set of ongoing requirements in Appendix 4 of the guidelines, with specified exemptions. That does not mean a VC fund needs no valuation: its investors still receive reported values, its accounts are still audited, and MAS's conflict-of-interest examples ask managers to ensure the price of an investment is fair and established independently when moving assets between funds (SFA 04-G05 Appendix 5, conflict-of-interest examples, 2025 version).

NAV sub-fund by sub-fund

In an umbrella VCC, each sub-fund is a separate pool for accounting purposes. ACRA states that the assets of one sub-fund cannot be used to discharge the liabilities of another, and separate accounts and financial statements are kept for each (ACRA post-registration guide, 15 June 2026; IRAS VCC e-Tax Guide, 22 April 2026). NAV is built in the same layers every time:

A VCC may prepare its accounts under Singapore accounting standards or other recognised international standards, namely IFRS or US GAAP (MOF note on the VCC Bill, 2 October 2018; confirm current ACRA rules before choosing). The fair-value principles of the chosen framework drive how investments are measured, and the valuation policy should be consistent with them.

Hard-to-value and illiquid assets

MAS expects managers to disclose "the valuation policy and performance measurement standards" and, where there are hard-to-value or illiquid assets, "the methodology and procedures for their valuation" (SFA 04-G05 para 4.1.4). The table below describes typical valuation inputs by asset type; the method a fund actually uses is whatever its disclosed policy says.

Side pockets separate illiquid assets from the main portfolio. MAS describes side-pocketing as placing (normally illiquid) assets in a side-pocket account, with redeeming investors not receiving their share of those assets until they are liquidated. Gating limits the amount investors can withdraw in a redemption period. Both must be disclosed with any penalties, and both depend on the valuation policy being clear about when an asset becomes hard to value.

NAV cycles, cut-offs and errors

How often NAV is struck is set by the fund documents, not by the VCC framework. As a matter of market practice, open-ended liquid strategies tend to value at each dealing day, while closed-end private-market funds tend to report quarterly and at capital events. What the documents should fix:

1. Valuation point: the date and time at which prices are taken.
2. Dealing cut-off: the latest time subscription and redemption requests are accepted for that valuation point.
3. Release timeline: how long after the valuation point NAV is published to investors.
4. Suspension triggers: when NAV calculation or dealing may be suspended, and who decides.
5. Error policy: the threshold at which a NAV error is corrected for investors, and how affected investors are compensated.

NAV error thresholds and compensation methods are set by each fund's policy and are not prescribed by the VCC framework; the board should approve them and receive reports when they are triggered. Who performs each step is set out in the operating model, and how fee accruals are calculated in sub-fund economics.

What the audit does

A VCC must appoint an auditor within three months of registration, and the Companies Act audit exemptions do not apply to VCCs (ACRA Step 2, 29 January 2026). Financial statements, with the auditor's report, go to shareholders at least 14 days before the AGM, which is held within six months of the financial year end (ACRA AGM page, 29 January 2026). The audit tests whether the year-end financial statements, including investment valuations, are fairly presented under the chosen framework. It does not validate each dealing-day NAV, and it does not replace the independent valuation expected during the year. Common audit focus areas are valuations based on unobservable inputs, fee calculations, expense allocation between sub-funds, and the existence of assets held with custodians.

What this page does not cover: accounting-standard technical guidance and the definitions of administrator and custodian roles (see vccfund.com.sg/service-providers). Past valuations and reported NAVs do not indicate future results. To interpret this for a specific fund, you can register your enquiry through the contact options on this site.