Getting the Best Out of Fund Administration

By Ras Sipko
Published on Dec 4, 2012

Fund administrators are today under intense pressure to perform as they face greater scrutiny than ever before from clients.

Showing that they are operating within industry best practices to help boost their client's investor confidence couldn't be more important, particularly in the past two years, as investors demand greater transparency and want information to be delivered at speed and with accuracy, alongside regulatory changes.

To show that they are working to such high standards and within best practices, it has never been more important for fund administrators to show that they are working with the best partners possible to achieve this.

A recent report by Deloitte, which looked at fund administrators from across the globe, found that alongside regulatory change, cost containment, implementing new technology, maintaining service quality, and pressure on fees, were some of the top key challenges they faced today.

Regulatory changes, such as UCITS IV and the Securities and Exchange Commission Custody rule, have a significant impact in the fund management industry and it is essential for administrators to stay on top of all the changes and be prepared for new data delivery and reporting requirements.

When it came to service quality and technology, the market crash of 2008/09 saw many administrators having to adapt their technology to maximize efficiency and streamline processes.

The services clients want have also changed, with risk reporting and greater transparency playing a bigger role – in fact, these are set to become core services going forward.

Administrator fees are also under pressure, with the alternatives space in particular, such as hedge funds, demanding more services for lower fees.

With fees under pressures, costs are also being squeezed. At the same time however administrator do benefit from increased demands by investors for alternative investment fund managers to be administered by reputable third party. This shifts the burden to provide enhanced level of service on fund administrators which in turn promotes investors confidence that fund managers do adhere to industry best practices.

With the right software provider, fund administrators can expect to tap into key services, through the use of innovative technology, to achieve best practices in transparent reporting including document tracking and management, greater control of cash transactions, automation of processes, and increased efficiency.

KOGER® Transfer Agency System, known as NTAS®, not only helps fund administrators manage costs, it also helps them address the array of complexities they face today.

With NTAS® and the bespoke approach, fund administrators benefit from effective, robust and scalable solutions, to help manage industry best practice standards. Some of NTAS® key features include reconciliation and substantiation of cash, trades and positions, fund level accounting and striking of NAV on dealing dates, maintenance of investor registry, preparation and distribution of investor statements, performing AML/KYC for onshore and offshore entities in the investor base, calculation of incentive and administrative fees.

NTAS® is being used by firms working for the investment management industry which control over one trillion dollars in assets.

Fund administrators given the demands being placed on them by today's best practices must make sure that they can satisfy the flight to quality that investors demand.