Investors and Fund Managers’ Guide to Hedge Fund Administrators
It seems like every day there’s a new hedge fund in the financial news. And while it can be exciting to follow how they operate and invest their money; it can also be overwhelming. Even if you're interested in investing in hedge funds as an individual, your chances of success are slim if you work with a hedge fund without first understanding the industry.
Did you know that the average salary for hedge fund administrators is $45,835? You might not know it yet, but you could be the next great hedge fund manager and earn a good amount. In this article, you will see what activities hedge fund administrators do and how and why it is important to fund the right hedge fund administration services.
What is a Hedge Fund Administrator?
A hedge fund administrator’s responsibilities are extremely wide-ranging. What a hedge fund administrator will do, however, will vary depending on the hedge fund administration services hired and the type of hedge fund they’re working with. You can expect your hedge fund administration services to be involved in a wide variety of activities, including: -
Finding a Good Hedge Fund Administrator
According to the survey, fund administration services are more likely to be outsourced by a fund manager with an AUM (Assets Under Management) above $1 billion (75%), as compared to a fund manager with an AUM below $1 billion (44%). Therefore, it is the most necessary work across all hedge fund sizes.
But, there are so many hedge fund administrators out there and it can be difficult to differentiate between the good and the bad. So, there are a few points to analyze before hiring any hedge fund outsourcing services:
You should look for an administrator who is reputable in your industry. For example, if you are an investment banker and are looking for a hedge fund administrator, you will want to make sure you hire an administrator that works with hedge fund managers who are in the same industry as you.
You should look for an administrator who has been around for a few years. This is a good way to make sure that they have the experience and track record to properly manage a hedge fund.
3)Costing and Safety
After you have hired a hedge fund administrator, you will want to make sure that you are properly insured against any potential lawsuits or penalties. If a lawsuit or penalty is ever levied against your hedge fund, make sure that you are mindful of any fees that may come with that.
Why Is It So Important to Hire the Right Hedge Fund Administrator?
Hedge funds are incredibly intricate and extremely complex financial instruments. If you choose to work with a hedge fund administrator who is not properly qualified and experienced, you could end up with significant issues on your hands.
1)Penalties or Criminal Charges:
Not only could you end up losing money, but you could also face penalties and even criminal charges if the hedge fund’s investments have gone sour and you were unaware of them. With a bad hedge fund administrator, you could also find that your investments are mishandled, and you lose money due to poor management.
Even worse, you might find that your hedge fund had a security breach and managed to lose your funds. If you are a serial entrepreneur who wants to invest in hedge funds, you will need a good understanding of hedge fund administrators. You will also need to keep your eyes open and be cautious when it comes to signing up with a new hedge fund.
When starting a new business venture, there are many challenges ahead of you, but one of the most daunting is finding a good provider of hedge fund administration services. As this is a very specialized field, it is important to make sure you hire the right person for the job, such as IBN Tech , which has a proven track record of handling over 100 hedge funds under administration outsourcing.