What new services will you be introducing over the next 12–18 months? What are some of the value-added services now being offered by fund administrators?

A range of services is planned to be offered by fund administrators over the short term. Many concentrate on enhanced risk reporting and customisation of reports as well as developing middle- and back-office services, website offerings and ways to increase efficiency and lower costs.

Ian Headon at Northern Trust reveals his company has identified governance, liquidity and counterparty exposure as the key focus areas for its clients. This is where product development will focus.

“In the last year we have implemented hedge fund monitors for the fund of hedge fund (FoHF) manager as well as created a Ucits hedge fund operating model, including the necessary risk and performance calculations,” he says.

“In the next 12–18 months we will continue to build out these services with particular areas of focus, including developing our front-office capabilities for FoHFs to include scenario analysis services,” he explains. Additionally, Northern Trust intends to extend its investment operations outsourcing services to hedge funds by further developing its middle-office capabilities,  says Headon.

At HSBC Securities Services the focus is on deepening the prime services product offering, expanding and adding automation to the middle-office service for hedge funds and alternative managers, improving internet reporting and messaging tools for customers and continuing to implement strategic architecture, says Paul Stillabower. This, he believes, will enable HSBC to offer more standardised services to its global client base, regardless of geography, trading strategy or end client base.

In addition, the company plans to continue to offshore services to its wholly owned ‘centres of excellence’ in order to streamline processes, improve customer service and manage cost.

Hans Hufschmid at GlobeOp says investor reporting through its GoBook portal is a key area of focus. Increased data and customisation, greater flexibility in manager selection of data for individual investors, and more transparency into portfolio and operational risk management is to be offered.

“Our independent valuation services and loan servicing for hedge funds and other buy-side clients will be further enriched. Our cash management service, GoMoney, has just been updated to offer increased currency coverage and custody service through a new third-party alliance,” notes Hufschmid.

Independent reconciliations for clients not currently on the GlobeOp platform are also planned. “We will use our extensive electronic connections to prime brokers and counterparties to match cash, positions and trades to files provided by these new clients in our state-of-the-art reconciliation engine,” says Hufschmid. “Funds seeking to reduce IT investment and/or operational risk will be offered an increased range of data centre and hosted services, business continuity and disaster recovery options,” he notes.

Joseph Truelove reveals Kleinwort Benson has started to focus its efforts on cross-selling. “We have many fund management clients who have a need for private wealth management services such as UK-resident, non-domiciled individuals who benefit from using offshore trusts for estate planning, asset protection and tax mitigation. A number of our clients have also availed themselves of employee-funded retirement benefit schemes which we can administer from our Jersey office and various other deferred incentivisation schemes,” says Truelove.

Jonathan White at Viteos Fund Services says his company will be providing enhanced reporting functionality to clients who need it. A platform known as Asttra will provide clients with risk reporting and frequent reporting in a customisable format.

“In addition we will enhance our managed accounts offering by providing a clear definition of tiered services,” he says.

“In light of recent industry pressures for fund managers to diversify and mitigate risk, coupled with requests from our customers to provide a service offering for long/short strategies, State Street recently introduced a service called enhanced custody model (ECM),” explains Deborah Yamin.

“ECM is designed to meet the lending, custody, execution and risk reporting needs of long/short strategies while delivering reduced risk, lower cost, operational efficiencies, incremental revenue and increased transparency,” Yamin says.

At SEI, David Morrissey says the focus is on enhancing existing capabilities in order to offer a complete outsourcing solution. SEI, he says, will continue to develop its collaborations. An example of this is a recent partnership with Advent Software and Virtus Partners.

Virtus provides fixed-income collateral administrative services and data on structured and non-structured transactions across a broad spectrum of investment vehicles, including hedge and private equity funds, separate accounts, collateralised loan obligations and total return swaps. This he believes will help SEI to increase loan processing automation and incorporate in-depth, independently sourced data.

“With more managers looking at regulated products, we’ve seen an increase in managers launching Ucits and qualified investment funds and so we know that will be an area of growth for us since we are well equipped to handle those,” he says. “Additionally, we’ve had more interest from managers launching life settlement products. While the asset class has only just emerged recently, SEI has more than a decade of experience servicing these products.”

Trinity already provides daily net asset value (NAV) production, a managed accounts platform and many middle-office services in response to demand over the past 12 months. “We have also recently launched our new client website,” says John McCann. This service allows clients to go online and see the latest transactions, NAVs, fund prices and other pertinent information, updated four times a day.

Enhanced investor reporting, middle-office and operational support tailored to the needs of equity long/short, macro and event-driven strategies are planned by LaCrosse Global Fund Services, according to Stuart Feffer. Support for additional trading and portfolio management systems and risk reporting services is also in preparation.

Equinoxe has developed a solution to offer managers access to market-leading portfolio accounting software, to outsource the majority of their middle-office functions and to outsource their technology infrastructure down to server hosting and support, says Stephen Castree. “This one-stop integrated solution is currently being rolled out step by step across our offices,” he says.

Dermot Butler says Custom House Global Fund Services expects to introduce more reporting choices on its Chariot programme, a secure web fund reporting process. “We are also increasing our capacity to offer outsourced services from price vendors, risk analysis companies, such as RiskMetrics and Kinetic, and data providers,” he says.

“As investor demand for managed accounts grows, so does the opportunity for independent administrators to administer these managed accounts, believes Butler. “We plan to enhance our middle-office service to a full service for those clients that need it,” he notes.

Over the next 12–18 months Citi hedge fund services will be extending its global operating model to cover investor services/transfer agency, and will be introducing enhanced FoHF middle-office services, as well as additional fund manager reporting services, says Richard Ernesti.

Much of the focus over the short term at Citco will be working towards standardisation within the administration industry, says Oliver Scully. “However, new services will include independent transparency to investors and the enhancement of existing middle-office, tax and pricing services,” he adds.

Butterfield Fulcrum has identified managed accounts as a rapidly growing market sector and as a response has recently launched Altinus, an independent, managed account platform that provides segregated and co-mingled managed accounts with a common set of tools for operations, administration and risk monitoring, says Akshaya Bhargava.

The platform provides an advanced operational and technological infrastructure that complements the investment management services provided by an asset allocator.

“We see middle-office services, technology add-ons and fund settlements as part of our offering but still big growth areas for us,” says Liam McNiffe at Bank of Ireland Securities Services. He says middle office will include trade matching, trade status reporting, risk reporting and flash P&L reporting.

 “We are looking to introduce a full integrated front- and middle-office functionality to add on to our current administration platform,” says Peter Hughes at Apex Fund Services. “Some administrators indicate that they can provide cap intro for their clients but this generally involves passing some information on to their fund of fund clients which isn’t effective. We want to take this to the next level and hold an event just for our clients to meet allocators that we have found for them,” he concludes.