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Fund Administration: A Differentiator in an Increasingly Complex World

27th Mar 2019
Wouter Plantenga, ICS Head of Group Client Services, and Kobus Cronje, Managing Director – South Africa, recently hosted a webinar with the IMDDA.

Here is what they had to say:

“Hosting the webinar with the IMDDA gave us a fantastic opportunity to explore some of the ways in which fund administration is evolving and highlight why we think third-party administration has a critical role to play in the future of asset management.”

“Ultimately, fund administration is a set of outsourced services and activities designed to support the life cycle of a fund.”

“Generally speaking, fund administrators perform a wide variety of services for alternative investment funds which could include calculating the net asset value of a fund, providing investor reporting services, managing regulatory communications and providing secretarial, treasury and governance services.”

“The intention is that, by outsourcing these services, fund managers are able to concentrate on their core competencies and portfolios, thereby enhancing asset values and returns. It is certainly our experience that investor appetite to explore specialised areas and new markets is driving the demand for greater fund administration support.”

“Alternative asset classes, such as private equity, real estate and infrastructure, for instance, are moving centre stage to complement investor appetite for traditional investments, with investors increasingly exploring niche opportunities such as FinTech.”

“Support also needs to be increasingly global, with investors engaging in multiple jurisdictions, time-zones and currencies, requiring knowledge of different regulatory frameworks, legal systems and reporting requirements.”

“In addition, rafts of complex international regulation combined with ever-greater investor demands is putting pressure on margins, which means that having the support of a dedicated back-office supplier can not only support the growth ambitions of a manager but act as a real differentiator in the minds of investors too.”

“Selecting a third-party administrator can offer significant benefits, including cost-efficiency compared to in-house solutions, genuine independence, accountability and specialisation in specific areas.”

“In particular, the systems that fund administrators operate can provide real advantages. Today, investors are demanding greater transparency over what systems are being used as part of their own due diligence procedures with specialist platforms and accounting systems very much the order of the day. The scalability and ongoing investment in these systems that a third-party administrator can offer also frequently makes outsourcing a cost-effective option for managers.”

“Being able to draw on the people and expertise of a specialist administrator also offers huge benefits. With the private equity environment being generally cyclical, for example, staffing for managers can be tricky and create inefficiencies during quieter periods, whilst administrators can spread their workload across peaks and troughs, offer some welcome service continuity and provide insights into niche areas.”

“Looking forward, it is absolutely our conviction that third-party fund administrators will play an increasingly pivotal role in the global asset management landscape.”

“Rising investor demands, a drive towards excellence and a focus on data analytics means that those managers that can demonstrate they have the backing of a fund administrator that is an expert in regulatory issues such as AIFMD, that has knowledge in specialist areas such as ESG, and that operates cutting-edge digital or blockchain-based systems, will be much better positioned in a complex environment. In turn, that should give investors much more confidence too.”

If you would like to discuss the webinar with Wouter and Kobus please contact them directly.

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