Trends in Hedge Fund Administration
Abstract
Hedge funds are increasingly outsourcing, and the hedge fund administration business is flourishing.
A major transition is occurring in the hedge fund administration market. Services are expanding from fund administration庸und accounting, NAV calculation, secretarial services, and investor relations, to name a few葉o full business process outsourcing, according to the new Celent report, .
The potential growth is looking good for the 70 hedge fund administrators across the globe. Leading the pack of administrators, as measured by total assets under administration including direct hedge funds and fund of funds, are CITCO, HSBC Alternative Fund Services, and Fortis Fund Services.
Hedge funds continue to astound the market with double-digit growth rates and global demand. As a result, there is always more business for hedge fund administrators. Based upon Celent analysis of data from Hedge Fund Research and EurekaHedge, the global hedge fund market is approximately US$1.3 trillion in assets and is expected to reach US$2.38 trillion by 2009, an annualized growth rate of 17%. European hedge fund assets will significantly increase their share of the global hedge fund market, rising from 27% in 2006 to 35%; assets will rise from US$397 billion to US$835 billion. Asia's market share will increase from just under 5% (US$74 billion) to 9% (US$215 billion). All of this is good news for hedge fund administrators.
The hedge fund administration business may be heating up, but increased competition has yet to lower prices. "As the competitive front garners large firms with deep pockets, it would be natural to see price declines. But not necessarily," says Denise Valentine, senior analyst and author of the report. "Most of the pricing matrices are as complicated as the alternatives business itself. The ancillary services blossoming in the HFA offering allow for a multitude of pricing matrices."
This report explores outsourcing in the hedge fund industry and its impact on the evolution of hedge fund administration. Also included is a ranking of hedge fund administrators and detailed statistics on the hedge fund and fund administration markets.
The 36-page report contains 12 figures and 4 tables. A table of contents is available online.