If you are a fund manager or investment firm owner of a start-up, hedge fund or fund of funds, then you might be facing numerous challenges. In recent times, launching a hedge fund has raised numerous challenges for fund managers, especially those with AUM (Assets Under Management) under $100 million or new entrants in the request. These challenges are usually what every manager needs to concentrate on.
Out of numerous challenges, the selection of a hedge fund administrator is the last but not the least important decision made by the hedge fund director. In this article, you will learn about hedge fund administration services and fund accounting services and why choosing these outsourced services is the best way to handle this challenge.
How can outsourced hedge fund administration services help you?
The hedge fund director must perform several important functions after the fund is launched, one of which is the daily NAV computation and shadow accounting hedge fund . NAV computations need to be conducted on a daily basis to dissect and upload data to NAV for further valuation processes and other performance reporting demands. At the same time, this information needs to be accurate and dependable, as inaccurate prices may lead to adaptations and inaccurate P&L reporting to investors.
Hedge fund outsourcing services play a crucial role in ensuring all functional conditioning is handled with all their efforts, which helps fund managers and directors concentrate on other precedents from time to time. According to the survey, hedge fund administration and accounting services are the most outsourced by hedge fund managers across all AUM sizes.
Trend of outsourcing fund administration and accounting services.
Fund accounting outsourcing is a part of the fund administration work and is one of the most important things that any hedge fund manager can do to improve efficiency in areas such as three-way trade and position reconciliation, fund performance calculation, independent portfolio pricing, management and performance fee calculation, income and expense allocations to investors, cash reconciliation, daily trade break reporting, secure online portal access to accounts and so on.
The salient benefits of hiring a hedge fund back-office outsourcing firm for fund administration are:
1.Helps in growth and scalability
A start-up hedge fund manager can reap the benefits of growing and scaling up the fund's size and increasing the number of clients with the help of an outsourced firm to calculate the NAV and Shadow NAV for measuring the fund's performance and further analysis.
As you get the benefit of fund accounting services by hiring hedge fund back office services , which help you with the preparation of financial statements and fulfil tax and regulatory compliance without a biased view, as well as helping you to reduce your tax liability in legal ways.
3.Accuracy and Time Saving
You can get rapid report delivery by hiring a hedge fund back office service provider who can provide the daily reports every morning and month-end reports within five days of the following month. In addition to fast delivery of reports, they also ensure the accuracy of reports delivered with the help of technology that are designed to support every fund structure and asset class traded.
You can also lower the risk of fraud and data breach because these third-party firms are highly regulated and reputable enough to protect the fund's financial data. You can also leverage the team of professionals who follow the best practices and improve efficiencies.
Costs are very important for you to see if you are a start-up or a small hedge fund manager. The cost of hiring an in-house fund administrator can be difficult to adjust within your budget. Therefore, an outsourced company comes at a much lower cost, provides the benefits of a team of professionals, and provides the option of customization of services chosen, such as financial statement preparation services, data tracking services and others based on your budget.
Factors to be considered while selecting an outsourced hedge fund administrator
In selecting hedge fund administration services , various factors need to be considered.
But if we look beyond this incipient phase also, is the price the only factor? Yes, fund administration is one of the important factors, but at the same time, this is a crucial factor as it plays a pivotal role in small and start-up businesses' barricade finances.
It is important that fund managers have to use redesigned technologies to deliver the anticipated returns to hedge fund directors. It's important to ensure that the daily NAV computation is accurate and within the given reversal time.
It is important that your hedge fund administrator service provider has a team of qualified professionals to deliver quality work. Hedge fund administrators need to ensure that internal and external collaboration is correct and as per procedure.
Therefore, choosing the best outsourced hedge fund administration services that come with the best accounting services provides a never-ending benefit for start-ups and small hedge fund managers across all fund sizes, and there are several factors to consider when making that decision for cost cutting and improving efficiency.
With over 12 years of experience, IBN Tech can be your hedge fund administrator service provider. We are a reputable firm providing fund middle and back-office services to start-ups, hedge funds and funds of hedge funds in the United States, United Kingdom and Europe.