Due to a maturing and institutionalized investor base, increased complexity in regulatory requirements and a push to streamline costs many fund managers are pushed to outsource their fund administration function to external providers.
While it has been common practice for many years for most Asia-based hedge fund managers to work with an independent fund administrator, alternative investment fund managers in private equity and venture capital are catching up now.
Once you have decided to outsource the administration of your fund, the fund manager should examine the third-party administrator’s policies and procedures, cultural fit, pricing model and technology.
Driven by investor pressure for independence and institutional-level infrastructure, a large proportion of fund managers are now choosing to outsource their back-office fund administration function. Limited Partners (LPs) appreciate what a third party brings to the fund by keeping the books and records at arm’s length.
Growing complexity in regulatory reporting requirements that include meeting ESG standards, AML/CFT regulations and FATCA/CRS make managing administration in-house increasingly challenging and expensive. As you scale your business, the value achieved by outsourcing your administration grows. Managing administrative and compliance tasks for a number of funds across different jurisdictions can put a strain on resources – that is where a skilled fund administrator can remove the burden and allow the fund manager to focus on delivering outsized returns.
With the growing complexity in regulatory requirements and increased investor demand for independent reporting, fund administration and investor services have become more costly and time-consuming. As fees and margins come under pressure, outsourcing can offer a more efficient option than the training hours, infrastructure, costs and recruitment efforts required for an in-house administration team. Labor shortages have also been regularly quoted by fund managers as a driving factor for outsourcing. Often, the preference would be to focus hiring on key functions such as the investment deal team.
Outsourcing offers access to specialized services and sophisticated support tools, optimizing efficiency so that your best talent can remain focused on driving the core business. Specialization may include a dedicated investor services team, expertise in managing complex fund strategies with multiple share classes, or access to the latest digital investor onboarding technology
Technology is not something Asian fund managers are always keen to invest in. This is due to the significant costs required to set up the digital infrastructure which must be sourced by the fund manager.
Fund managers also know that investment in technology needs to be consistent. Tech infrastructure needs to be managed, maintained and updated. To fully utilize the systems, managers need to invest in training and specialization.
Instead of relying on spreadsheets, investment professionals who choose to outsource would gain access to fund administration specialists and advanced fund accounting as well as investor focused systems without bearing the full costs.
The industry is rapidly transitioning to automated solutions where data quality is key. Full insights on fund performance and key metrics are essential, with investors increasingly expecting transparency, 24/7 access to data and dashboard reporting.
Our clients enjoy a 2FA enabled investor portal which feeds real time data directly from our fund accounting software. This data is presented in the form of dashboards, customized portfolio statements and information can be accessed from a data repository.
At Trustmoore, we offer a bespoke suite of connected fund administration services and solutions (such as PFS-Paxus, TM-Connect and Mesh ID) in a cost-effective and efficient way. Our fund administration offering is constantly being updated and optimized to the keep up with the latest available technology.
While the level of automation may increase, it never replaces the human element of our service, and we pride ourselves on our boutique-style approach. When you partner with Trustmoore Fund Services, you can be assured of a service that is customized to your specific needs and managed by carefully assigned experts who will take the time to get to know you and your business.
Talk to us today to optimize your fund administration.