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2011 global hedge fund survey - Hedge fund administration - EY - United States

2011 global hedge fund survey: coming of age

Hedge fund administration

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“Outsourcing to administrators offers our investors a level of comfort that their asset values are being looked at and calculated independently.” Survey respondent
(hedge fund manager)

Managers and investors cite independent valuation as the top benefit of using administrators.

Hedge funds are clearly responding to investor demand as the majority of the industry now outsources to administrators in some capacity.

Both hedge funds and investors believe it’s the role and responsibility of the administrator to calculate and issue the NAV. Nearly two-thirds of both groups agree that administrators have a very positive impact on investor confidence.

The survey results show that the perceived benefits of outsourcing to an administrator are not in all cases aligned with the experience of the hedge funds. Managing risk of error is not a strong reason for hedge funds to outsource to administrators, but investors believe that is a key benefit.

Surprisingly, few hedge funds or investors note the independent reconciliation of a hedge fund’s investment positions to custodians and brokers as a key benefit of the administrator even though this has become an area of significant focus in the wake of the Madoff scandal.

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