Blackstone Replaces Citi with State Street as Admin for Liquid Alts

State Street has replaced Citi as administrator and transfer agent for Blackstone’s two liquid alternative funds.
By Editorial
State Street has replaced Citi as administrator and transfer agent for Blackstone’s two liquid alternative funds.

The two funds, Blackstone Alternative Alpha Fund (BAAF) and Blackstone Alternative Alpha Fund II (BAAF II), will pay State Street, as administrator, a monthly fee a of 4.5 basis points on the first $250 million in aggregate net assets, 3.5 basis points on the next $250 million and 3 basis points on any assets from $500 million and up. Each fund had close to $650 million in assets as of the end of May.

Earlier this year, State Street also won a custodial and transfer agent mandate for another liquid alternative fund, Permal Alternative Select Fund, part of the Legg Mason group. State Street now services 14 of the top 25 liquid alts, according to Morningstar.

“Liquid alternatives present both opportunities and challenges for asset managers including distribution, organization and operations,” says Alan Greene, executive vice president at State Street. “Our fully integrated technology platform takes care of the day-to-day back office functions of collateral management and offers one-stop shopping for reporting, compliance, accounting, custody, settlement and analytics. By taking the operational risk off their shoulders, we can help our clients focus on harnessing value from new sources.”

Liquid alternatives, which commonly take the form of 40 Act funds in the U.S., provide opportunities for both retail and institutional investors to diversify their portfolios and hopefully manage risk, though many investors still have mistaken assumptions about the vehicles, says State Street.

“Alternative asset managers must match product innovation with product education and help investors do their homework to determine if liquid alternatives are a good option for their portfolio,” says Will Kinlaw, senior managing director and head of portfolio and risk management research at State Street Global Exchange. “Whether investors are looking for diversification, liquidity, performance or transparent fee structures, understanding the desired objective is first and foremost.”

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