96% of fund managers outsource admin services

SAINT HELIER, JERSEY — A new study by capital market company Ocorian found that the majority of alternative fund managers are progressively turning to outsourcing providers for fund administration services.

The research shows that 96% of fund managers plan to utilize third-party fund administration providers in the forthcoming three years.

Currently, fund administration operations are evenly split, with 40% of managers handling services in-house, 39% outsourcing to third parties, and 21% using a hybrid model.

However, managers also expressed major concerns while transitioning to a new fund administration provider. This includes data migration speed and accuracy, market and investor perceptions, and potential effects on the reporting cycle.

Interestingly, 23% of managers currently outsourcing are contemplating a switch in their fund administration provider soon. Of this segment, 13% plan to engage a different third party, 7% are thinking of bringing it in-house, and 3% aim to add another third-party provider.

The main motivations for these potential switches are improving service quality (75%), enhancing data/reporting (69%), adopting better technology (63%), and emphasizing ESG capabilities (31%). Among those pondering a change, the top factor driving the decision is cost (75%), trailed by service quality (67%) and provider reputation (50%).

Ocorian’s Head of Business Development and Fund Services, Paul Spendiff, noted that outsourcing fund administration is cost-effective and allows managers to concentrate on portfolio growth and management. 

He added that this strategy also merges the perks of internal teams with external expertise, including best industry practices and cutting-edge technology.