Global Custodian Hedge Fund Administration Survey 2012 Published

Global Custodian Hedge Fund Administration Survey 2012 Published

The results of the Global Custodian 17th annual Hedge Fund Administration Survey are released today. A summary of rated providers and the Best in Class (BIC) awards that they earned are listed below in Table 1. To illustrate the changes in provider ratings since 2011, we've used a color coding system where green indicates upward movement in a rating, red a downward movement, and blue indicates that a provider achieved a rating in a category it did not qualify for the previous year.

Table 1: Rated Providers According to Category and Number of BIC Awards Received

* Only the long-standing rule preventing a shift of more than one rating per year denies this provider Top Rated status.

** Were it not for the long-standing rule preventing a shift of more than one rating a year, this provider would be Not Rated.

Results were based on 1,293 submissions from hedge fund clients. In addition to the administrators listed in Table 1, Apex, Custom House Global Fund Services, Daiwa, GlobeOp, SGGG Fund Services, U.S. Bancorp and Viteos Fund Services also received responses. While the responses were too few in number to qualify for rating, we were able to include short assessments on these administrators.

Methodology

Service providers were judged based on 69 rating questions across the following service areas: client service, value, fund accounting and valuation, audit support, investor services, reporting to investors, reporting to fund managers, compliance and taxation, corporate administration, fund structuring, fund of funds administration, middle-office services, registered alternative products and technology. Respondents graded their administrators using a scale of 1 to 7, where 7 is excellent; 6, very good; 5, good; 4, satisfactory; 3, weak; 2, very weak; and 1, unacceptable. Scores are weighted for the size and sophistication of the respondent and for performance on questions deemed important by respondents. Providers were eligible for a number of ratings including location (based on the service center rated by a client), size (Less Than $100 Million, $100 Million-$1 Billion, $1-5 Billion and More Than $5 Billion), strategy (Single Strategy, Multi-Strategy and Fund of Funds) and client origin (North America, Europe, Latin America & Caribbean, Middle East and Asia-Pacific). Providers were also eligible for ratings in a special category known as Leading Clients and on a Global basis. We regard our Leading Client rating, which measures the ability of a provider to attract and satisfy the most sophisticated and knowledgeable type of client, familiar with multiple providers, as the sternest and truest test of the capabilities of a hedge fund administrator. In total we identified 218 separate fund managers, who submitted a total of 1,148 separate assessments of their providers, that qualified as Leading Clients. They were chosen according to a number of criteria, including their sophistication and reputation in the industry, size and use of at least two administrators, but no respondent can count as a Leading Client unless they are a "classic" hedge fund (i.e., not a fund of funds or managed account platform or a long-only asset manager pursuing some alternative strategies). Rated providers are either Top Rated  (the provider secured a weighted average score that equals or exceeds the combined weighted average score of all providers in a category) or Commended  (a more subjective assessment, but weighted average scores below "good" are not considered). As in previous years, a provider may not rise or fall by more than one category in a year. A provider that received enough responses but an insufficiently high score is declared Unrated , while a provider that failed to get enough responses is Not Rated . In addition to being rated, providers are also able to earn Best in Class awards. These are judged on a category-by-category basis for each service area and awarded where a provider achieves a weighted average score for a particular service area within a category that is equal to or greater than the weighted average score of all providers in that combination of service and category. In all, 16 ratings (not including locations ratings) and 210 Best in Class awards were available. The benchmarks used to award both ratings and BIC awards can be found Tables 2 and 3..

Table 2: Global Benchmark Scores

Table 3: Location benchmark scores

The full results of the Hedge Fund Administration survey, and a full explanatory methodology, are available for GC subscribers here.

Contacts:

Dominic Hobson, Editor in Chief, at dhobson@globalcustodian.com or +44 (0) 207 228 3013

Allison Cayse, Surveys Editor, at acayse@globalcustodian.com or +1 513 574 0220

Muzaffar Karabaev, Survey Reprints/Research Enquiries, at mkarabaev@globalcustodian.com or +44 (0) 207 148 4289