Why Use a Fund Administrator?
• A hedge fund administrator often significantly reduces costs for a fund. When outsourcing to a fund administrator the fund will usually pay for the total cost of the fund administrator’s services, rather than in-sourcing and having to provide salaries and bonuses to various employees.
• Using a hedge fund administrator minimizes the responsibilities of a hedge fund. A manager can simply delegate the various duties to the administrator, and the administrator can use their own staff instead of having to compete to secure talent for the positions. This way the fund can be smaller, more efficient and able to focus entirely on the most important duties of managing a fund.
• A hedge fund administrator will probably have greater access to resources than a fund would. An administrator will already have the necessary accounting and operational resources.
• A fund administrator also tends to comfort investors because it adds an objective third-party overseeing the fund’s operations.
• Hiring a fund administrator also provides an experienced backbone to a new hedge fund. The fund administrator will have an experienced staff and can assume the more complicated duties, probably more efficiently than a new manager would.
Source: Hedge Co
