What Are the Types of Hedge Fund Administrator and Their Services

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 A hedge fund administrator provides particular back office and accounting services to a hedge fund. The primary service is the quarterly or monthly accounting of investor withdrawals and contributions. They also calculate losses and profits for a specific accounting period. Back-end services include transfer agent services. It entails managing the subscription documents and ensuring that checks are cashed. In this article, you’ll find the different services that hedge fund administrators provide and the types of hedge fund administrators.

 

Hedge Fund Administrator


Services Provided by a Hedge Fund Administrator

The main task of administrators is to provide specific back office and accounting services to a hedge fund. Usually, the administrators offer various services to the hedge fund managers. The core service includes a monthly accounting of contributions and withdrawals of investors and the computation of profits and losses.

 

Recently, hedge fund administrators are also offering a ‘second signer service.’ The service provides investors a significant assurance of the hedge fund manager not running off with their cash. Under it, a manager requires to get a sign-off from the administrator before he can transfer or withdraw an amount from the fund’s account. Hedge fund administrators can also execute duties like keeping financial records and computing the management and performance fee. They can also act as the registrar and the registered agent and perform Anti Money Laundering reviews.

 

Different Types of Hedge Fund Administrators

There are three types of hedge fund administrators. They include the following.

 

  • Small firm administrator – Small administration firms are run and controlled by one or two people. They have much experience in the hedge fund domain. Their typical client is a startup hedge fund. A hedge fund administrator working in such firms is a cost-efficient solution for a startup hedge fund. 

  • Medium-firm administrator – Medium firms are established businesses with an established and big customer base. The fund administrator here has extensive experience in the hedge fund domain. These administrators can charge a fee starting from $1500 or higher. They usually base their administration charges as a percentage of Assets under Management or AUM. 

  • Big firms – They are quite established in the hedge fund domain. Such firms can be subsidiaries of big international or investment banks. A majority of their customers are large hedge funds. The fund administrators here can charge up to a minimum of $5000 per month.

  • Offshore Hedge Fund Administration - It usually implies the administration of an offshore hedge fund. Their process and function are similar, but the fees of an offshore hedge fund can be configured in various ways. So, the administrator discusses the hedge fund fees structure with the hedge fund attorney if there are any discrepancies with it.

 

Final Words

A hedge fund administrator ensures that the fund's overall risk profile is reduced. It can free up a lot of the time of the managers, and they can direct their attention on the investment part of the business. You can find a good administrator and service provider through the recommendations of your hedge fund attorney.


Location: Singapore

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