Today, funds sourcing their asset servicing solutions are moving away from larger, broader administrators, and turning to boutique fund administrators. Hedge fund managers, particularly those in charge of smaller funds, may have much more to gain from administrators that provide bespoke solutions.
Why are boutique administrators preferable for smaller hedge funds?
Larger financial institutions usually provide asset servicing solutions based on short-term agreements, typically lasting one year or less. That leaves fund managers holding the proverbial bag if they are not able to find a suitable replacement. But with boutique fund administrators, managers can take advantage of services on a longer-term basis. A firmer relationship between both sides can easily emerge, as boutique administrators tend to work closer with hedge funds, especially small ones, than the big companies do. These administrators take pride in their reliability and in delivering what needs to be delivered in a timely manner.
Boutique administrators also allow fund managers to take advantage of tailor-fit and scalable services that meet their vehicles’ particular demands. They can then focus more intensively on their clients, and offer services that larger players, despite their wherewithal in the industry, ordinarily cannot offer.
What services can these administrators offer?
The range of asset servicing solutions offered by boutique fund administrators may include fund accounting, various investor services, preparation of annual and semi-annual reports and financial statements, valuation of assets, compliance services, and all necessary regulatory reports. This is just a partial list of services, and the services therein may vary depending on the particular needs of the hedge fund.
It is also important for administrators to have only the most advanced technologies available, technologies that can facilitate quick completion of reports and easy access for fund managers. These include the liberal use of cloud computing, which allows for the storage of large amounts of data, as well as convenience in access for the individuals and firms that need the data.
More funds are outsourcing these tasks to third-party companies
Boutique fund administration as a broad-based means of providing asset servicing solutions is best handled by third party firms. More hedge funds, large and small alike, have outsourced boutique administration to a variety of companies, many of whom have years of experience and established reputations in the industry. A lot of these companies also specialize in dealing with smaller and medium-sized funds, offering the requisite back- and middle-office services, among other specific needs.
