Differentiation and flexibility key for smaller fund administrators

Maintaining a flexible and differentiated service is key for the success of smaller fund administrators, according to industry experts.

Speaking to Global Custodian, Mariana Enevoldsen, director of fund administrator Heritage, explained that services offered by larger fund administrators may not be necessary or suitable for alterative funds.

“The main thing is that they differentiate themselves on service, they aren’t going to have the same infrastructure as a bigger player for example State Street,” said

“With some larger institutions, certain processes are set in stone so they can’t change and adapt to the needs of the fund.

“So flexibility and service is key for alternative funds that don’t need a big technology, a big machine or a big name.”

Gerry Warwick, Heritage’s head of operations in the UK and Ireland, also suggested a possible clash between large funds and large fund administrators that may both have complex protocols.

“I recently saw a particular fund chose a very large provider and what has happened is that you have got a large fund with all of its processes and procedures and you also have a large administrator with its processes and procedures which can be difficult to combine,” said Warwick.

“Smaller fund administrators are more flexible in this sense and this can help them fit the needs of the fund, particularly alternative funds.”

Warwick went on to outline the continued uncertainty in the alternative funds space that has been caused by Brexit.

Earlier this year Global Custodian investigated the impact of the UK’s decision to leave the European Union on the alternative funds space.

A Preqin study conducted in the aftermath of June’s referendum found a divide existed between alternative asset managers on the impact of Brexit.

Nearly one-third of alternative asset managers said they would invest less in the UK over the coming 12 months while just three per-cent said they would increase their UK exposures.

In the long-term alternative asset managers were also split with 14% each saying they will increase and decrease their UK investments.

“There was uncertainty in the first half of the year because people didn’t know what would happen and uncertainty in the latter half of the year because it did happen,” said Warwick.

“This has led to alternative funds keeping their heads down and not launching.

“I think there is more uncertainty to come for the space once the UK makes its decisions and starts its negotiations with the rest of Europe.”