Service Provider Basics:
Private investment funds and SPVs tend to have a set of core and auxiliary third-party service providers.
A Fund Administrator is considered as part of the 'core', essential set.
Role of the Fund Administrator:
A Fund Administrator performs many crucial functions on the administrative side concerning the day-to-day operations of an investment fund.
These include:
Dashboard: Maintenance & development of the front-end interface that all stakeholders (across fund managers, investors, compliance officers, auditors & regulatory counsel would see).
Fund Accounting: Tracking and recording the position data and trade data of the investment fund's holdings.
NAV Calculation: Net Asset Value ("NAV") calculation.
Compliance Function: Screening of investors on an initial and ongoing basis.
FATCA & CRS: Filing preparation for AOEI.
Register Management: Across the Register of Directors, Register of Members and Register of UBOs.
Subscription/Redemption: Processing investor subscriptions and investor redemptions.
Is a Fund Administrator Required?
The role of the Fund Administrator in certain circles (and amongst some emerging fund managers) has been questioned, on the ground that the (prime) brokerage already performs the portfolio calculation function.
However, full-service Fund Administration composes of many different functions and services, as detailed above.
Furthermore, whilst certain fund structures, as outlined in the local regulatory regime (such as the Cayman Islands 4(4) Exempted Fund and the British Virgin Islands Incubator Fund) does not strictly require the appointment of a Fund Administrator, for governance purposes, the roles of Fund Management–Fund Administration–Fund Audit should be carried by three independent parties.
In addition to providing a range of services, a Fund Administrator is a real value-add and provides confidence to investors.