Choosing a fund administration partner

Fund administration is a vital component of any asset management operation. And if portfolio management companies are to stand out amid the stiff competition in today’s investment industry, they need a competent partner to help fulfill this function. The task of fund administration can be quickly described as determining the value and performance of funds, which in turn enables the orderly distribution of dividends to the transfer agent. But this betrays its breadth. To wit, here are the procedures covered in fund administration: regular Net Asset Value (NAV) calculation; pricing of securities based on the market value; preparation of financial, shareholder, and compliance reports, computation of asset income, maintenance and reconciliation of the fund’s bank accounts, accounts reconciliation, filing of accounting reports, payment of dividends and fund expenses, and calculation of fund income. Here are the hallmarks of an outsourcing partner that can deftly take on this complex function: Access to the latest portfolio management technologies. For firms targeting to grow and expand nationally, if not globally, cloud-based systems that allow for multi-party fund monitoring in the real time is the way to go. An advanced infrastructure can be costly for companies to maintain in-house, so a great alternative is to pick a third-party provider that specializes in fund administration. The best ones can offer tailor-made solutions with only the truly useful fund management features for their partners, allowing for cost-efficiency in operations. Experience in the same market. Before, the domain of fund administration was monopolized by big banks, and understandably so. However, their experience and expertise may not always be applicable to the needs of smaller funds. If you belong to the small- or mid-market segment, for example, it may be a good time to explore your options, and select a partner that focuses on your sector. They will be able to easily provide scalable and more affordable solutions for your fund administration requirements. A robust audit program in place. Regulations-wise, this is a challenging time for fund administration. Asset management companies need to comply with laws and protocols such as the AIFMD, FATCA, FINRA, Patriot Act, and Anti-Money Laundering Act. A good outsourcing partner has a solid review program that takes into account the demands of all these regulations. If they handle offshore accounts, they also try to keep abreast of laws and emerging trends abroad. With this kind of outsourcing partner, fund managers can truly focus on growing assets under their management.