Unlock the Benefits of Outsourcing Fund Administration Services

Outsourcing fund administration services can be a game-changer for investment managers and fund administrators. By freeing up internal resources, they can focus on what matters most - growing their business.

This shift in focus can lead to improved efficiency, allowing for faster and more accurate processing of complex financial data. Fund administrators can expect to see a significant reduction in errors and discrepancies.

By outsourcing these tasks, fund administrators can also tap into specialized expertise and cutting-edge technology, enhancing the overall quality of their services. This expertise can help them stay ahead of the curve in an increasingly complex regulatory environment.

By making this move, fund administrators can also reduce their operational costs, allowing them to reinvest in their business and drive growth.

Fund administration services are a crucial part of the investment process, allowing fund managers to focus on portfolio management by outsourcing the financial paperwork.

A fund administrator is a third-party service provider that safeguards investors' interests by independently verifying the fund's assets and valuation.

Fund administration involves verifying and distributing investment assets, essentially acting as an intermediary between fund managers and investors.

By outsourcing fund administration, fund managers can free up time and resources to focus on making informed investment decisions and growing their portfolio.

Fund administration services can help you reduce cash flow problems by managing your assets and liabilities effectively. This is especially important during economic downturns when cash flow can be a major issue.

By outsourcing non-core tasks to a professional service provider, you can free up resources to focus on your investment strategy and produce alpha for your investors.

Fund administration services can also help you manage capital calls to limited partners, ensuring that they are informed and up-to-date on their investments. This can help build trust and strong relationships with your LPs.

A good fund administration team can provide expert advice and support, helping you improve and grow your company's performance. They can also help you set processes and best practices in place, ensuring consistency over time.

Fund administration services can also help with tax management, including timely filing of returns, having accounts audited, and deducting tax at source. This can help you avoid interest, penalties, and prosecution.

Here are some key benefits of fund administration services:

By using a fund administration service, you can also benefit from a dedicated client support person or team, budget management advice, and long-term strategic planning services. This can help you make informed decisions and achieve your investment goals.

Streamlining back-office operations is crucial for a successful investment platform. Many fund managers have been choosing to hire external companies to handle their back-office hedge fund services due to external pressures and internal operational challenges.

The ever-changing regulatory landscape, increasing investor demands, and rapidly evolving use of technology are additional factors leading to increased outsourcing in the fund administration industry. This trend is driven by the need to conserve valuable resources.

Fund administrators can help streamline back-office operations by automating and streamlining data flows, decreasing the burden of human error risk. By leveraging technology to handle data routing, many back-office tasks become far more manageable.

Quarter-end reporting becomes much cleaner with a fund administrator's standard fund financial statements delivered out of the box, including a Balance Sheet, Income Statement, Schedule of Investments, and Statement of Cash Flows. These reports are automatically generated from the underlying fund accounting system.

Fund managers should consider the third-party administrator's policies, procedures, and technology before agreeing to work together. It is vital that the business behavior, beliefs, and values between the fund manager and the administrator are in sync.

Having the right technology partner can give administrators a much-needed competitive edge in the private capital markets. This can help them build a scalable and efficient organization that meets the needs of demanding GPs.

Fund managers need to stay on top of the ever-evolving regulatory environment, which has led to a surge in regulations and reporting requirements.

The Alternative Investment Funds Managers Directive, Foreign Account Tax Compliance Act, Common Reporting Standard, and EU SFDR sustainability regulations all contribute to this complexity.

Staying compliant requires additional resources, and hiring a third-party fund administrator can help mitigate this risk.

They can provide specialized staff to handle the administrative tasks, such as keeping records and calculating NAV, fees, and financial statements.

Fund administrators also ensure that official books and records are current, assist with annual audits, and arrange meetings for investors and directors.

ASC 820 Administration is a crucial aspect of fund management, and it's essential to understand how it works. Fund administrators manage ASC 820 by ensuring fair value assessments are done correctly and disclosure obligations are met.

ASC 820 is a complex standard that defines fair value, establishes a methodology for calculating it, and mandates fair value disclosure. This standard is used in most financial statements, where amounts are recognized at fair value.

Fund administrators play a vital role in managing ASC 820 by providing expertise and resources to investment managers. They help determine when an entity must or may measure assets, liabilities, equity instruments, or transactions at fair value.

Here are some key aspects of ASC 820 administration:

By managing ASC 820 effectively, fund administrators can help investment managers comply with regulatory requirements and make informed decisions about their investments.

The regulatory landscape for fund managers has become increasingly complex. The Alternative Investment Funds Managers Directive was implemented in 2013, just one of the many regulations that have added to their workload.

Having to stay on top of multiple regulations can be overwhelming, but it's essential to remain compliant. The Foreign Account Tax Compliance Act and the Common Reporting Standard are two more regulations that fund managers must navigate.

Using third-party fund administrators with specialized staff can be a game-changer in mitigating the risk of non-compliance. These administrators can help fund managers stay up-to-date on the ever-evolving environment of regulations.

The EU SFDR sustainability regulations have further highlighted the need for fund managers to adapt to changing regulatory requirements.

Fund administrators have a significant responsibility in handling NAV-related obligations, and their failure to do so can lead to severe consequences.

In the case of Anwar v. Fairfield Greenwich (SDNY, 2010), investors lost $7.5 billion due to the defendants' failure to handle their obligations properly.

The court held that the administration agreements did not explicitly name plaintiff investors as third-party beneficiaries, but plaintiffs satisfactorily alleged intent to permit third-party enforcement.

The court also found that the administrators intended a discrete group of potential investors to rely on the NAV to invest in the funds.

The NAV was fundamental to plaintiffs' investment decisions, and they necessarily relied on the administrators' calculations.

The court inferred that the administrators were aware that investors would rely on their statements of the Funds' NAVs, giving rise to a duty of care.

The defendants ultimately settled by paying the Anwar plaintiffs $235 million in 2016.