Fund Administration and Transfer Agency

What is Fund Administration?

Fund administration refers to a set of services provided in support of active fund management including origination, underwriting / financing, asset management and raising capital for new deals. The function can be performed in house but it is normally considered as non-core function. Therefore, fund managers generally outsource it to third party service providers who are often independent experts, like a trust company, with technical understanding of fund management and regulation. They also perform independent verification and valuation of funds.

Functions of a Fund Manager

Having outsourced non core functions, the Fund Manager can then focus on the core functions such as:

• setting strategic investment goals, research and determine securities to invest in and grow the assets of the fund

• active management of trading portfolios and investment decision making to ensure fund goals are met.

• sourcing investors for the fund and attracting new capital

• ensure compliance with fund reporting requirements

• ensure that prospectuses and other reports/documents are completed, distributed on time and filed

• overall operation of the fund including risk management and investor customer service.

• hiring, selecting prime broker , outsourcing and complete oversight of activities that may impact their funds, remain the responsibility of fund managers. Therefore, they must actively manage more than just their funds’ investments.

Fund administration is achieved through fund accounting and registrar/transfer agency services. Fund administration services are dependent on the investment strategy, structure or transaction volume of the fund. The function is very sophisticated, requiring

• strong operational infrastructure with automated systems and internal controls

• shareholder administration – books, records and reporting

• technical expertise in regulatory changes, corporate secretarial and related services like corporate actions.

What is Registrar / Transfer Agency Service?

Registrar / Transfer Agency service refers to timely and accurate recordkeeping and distribution support for fund businesses. Registrar services include:

• maintenance of shareholder register and recordkeeping of investors’ bank account balances, cash, dividends, interests, capital gains and other distributions. Processing all cash received from or due to investors

• account administration including provision of investor reports like monthly fund statements and processing investor communications and related requests

• keep record of transactions like corporate actions including processing shareholder subscriptions, stock redemptions, switches and transfer and cancelation instructions received, and issuance of certificates.

• perform due diligence on new investors, internal controls and compliance with regulation particularly anti-money laundering and terrorist financing.

  
  

Functions of a Fund Administrator

• provide investment administration and fund internal change management

• business analysis and support for regulatory changes

• portfolio valuation including asset pricing and verification of securities independent pricing, handling securities and instruments held within funds

• calculation and communication of Net asset Value(NAV) daily and annual tax figures and liaison with tax and accounts auditors. Investigate and reconcile valuation issues

• corporate actions – confirmation and reconciliation of stock issues/splits, dividends, name or trading symbol change, mergers, acquisitions, bankruptcy, liquidation, spinoffs, etc.

• calculation of fund income, tax, distributions, expense accruals and payments

• maintenance of books and records, fund accounting, performance evaluation and reporting.

• production of financial reports, statements and audit liaison covering local GAAP and IFRS

• preparation of ad hoc and special reports for shareholders

• opening and control of fund bank accounts

• reconciliation of the broker, custodian, bank and investment manager statements

• transaction and processing, securities and cash reconciliations, settlement of daily purchases and sales of securities, collection of dividends and interests and reconciliation of counterparty data between investment managers, custodian banks, prime brokers, transfer agents, custodians, etc.

• preparation and filing of regulatory body reports

• pricing of the funds’ portfolios

• ensure compliance with anti-money laundering and reporting requirements

• supervision of the orderly liquidation and dissolution of funds, etc.
  

For more information about fund managers and to invest, please see our funds pages.

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