Is Your Fund Hedge Fund Administrator Doing These Things?

Every hedge fund administrator has three core functions for any mandate: calculating net asset value (NAV), processing subscriptions and redemptions, and providing investor statements.  However, in today’s competitive landscape, a fund administrator should offer much more than just these basic services.  Here are six essential tasks your hedge fund administrator should be excelling at to truly add value: 

• Digital experience: The onboarding and offboarding process for investors has evolved from a paper-heavy exercise to a fully digital experience.  Gone are the days of mailing 30-page subscription books; investors now log into an online portal, complete their documentation, and let the workflow tool handle the process behind the scenes. 
  
  Furthermore, Administrators should provide an online reporting system where investors can access investor statements, K1s (if applicable), and annual financial reports. Managers also benefit from this tool, allowing them to upload fund tear sheets and monthly reports for easy distribution.

• Daily position reconciliations:  Adopting a “follow the sun” approach, administrators should reconcile trade files from a fund manager with corresponding files from their prime broker(s) at the end of each trading day. This ensures that the information matches the custodian(s) records.  Any discrepancies should be flagged and appropriately resolved, giving fund managers a clear and accurate picture of their portfolio before the next trading day begins.
• Daily cash reconciliation: As positions shift, so do cash balances.  Administrators must track all fund-related cash movements – whether it’s paying expenses, settling trades, receiving subscription proceeds, processing redemptions, or meeting margin calls.  Any transaction discrepancies should be identified and flagged for immediate attention, ensuring full transparency and proper accounting. 
• Dynamic Manager Reporting: Gone are the days of standard monthly NAV reports.  Fund managers today want access to their data in a way that suits their needs, with the ability to slice and analyze it to derive meaningful insights.  Administrators should provide managers with an interactive online platform that allows managers to explore and visualize their data, though with sufficient controls to prevent accidental changes.  Managers can also use this data to generate investor letters and tear sheets, creating a more customized communication experience.
• Thought leadership: Administrators should inform clients about industry trends, regulatory updates, and market changes.  With access to a team of subject matter experts, administrators can offer valuable insights and guidance, positioning themselves as trusted partners who not only administer the fund but also stay ahead of market shifts.
• Comprehensive offerings: As custodians of the funds’ data, administrators should offer a wide range of services beyond basic administration.  These include support with compliance, bank account setup, preparation of financial statements, and coordination with audit and tax providers.  A holistic service offering ensures that all aspects of fund administration are covered seamlessly.  

In today’s fast-paced hedge fund environment, performing basic administrative tasks is no longer enough. A forward-thinking hedge fund administrator should be a true partner in managing a fund’s operations, providing value-added services that help fund managers focus on what they do best: making strategic investment decisions. From data access to expert thought leadership and comprehensive offerings, your administrator should be an indispensable part of your team. If your administrator isn’t already providing these services, it might be time to reconsider your choice and ensure your fund’s needs are fully met.