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Administration of hedge funds on the rise

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Alternative assets under administration totaled $6.4 trillion at the close of 2013, a 6.2 percent increase over the $6.0 trillion reported at the end of the second quarter of 2013.

This finding is unveiled in the 14th edition of eVestment’s Investor Alternative Fund Administrator Survey, which represents the current state of alternative investment fund administration.

“The alternative fund management business continues to be buoyed by increasing allocations from institutional investors,” the report states. “Alternative fund assets reported for eVestment’s administrator surveys have increased at an annual rate of 3.83 percent since 2008.”

The fourth quarter increase in alternative assets under administration follows a 22.9 percent increase in the second quarter of 2013. For the five previous periods surveyed in the report, the growth rates are as follows:

  • Fourth quarter 2013, +6.2 percent;
  • Second quarter 2013, +22.9 percent;
  • Fourth quarter 2012, +6.3 percent;
  • Second quarter 2012, -11.6 percent; and
  • Fourth quarter 2011, +7.6 percent.

When asked whether costs associated with servicing alternative investment funds increased or decreased in 2013 compared to 2012, survey respondents answered as follows:

  • Increased, personnel-related – 27.3 percent;
  • Increased, technology-related - 36.4 percent;
  • No change – 13.6 percent;
  • Other – 22.7 percent;
  • Increased, multiple factors (technology, personnel, legal) – 18.2 percent; and
  • Increased and decreased across various factors – 4.5 percent.

The report adds that 41 percent of reporting firms administered $3.8 trillion in hedge fund assets as of Dec. 31, 2013, an increase of 10.8 percent over the latter half of 2013 from $3.4 trillion. Surveyed firms averaged an 11.2 percent growth rate over the aforementioned period with smaller firms posting higher growth rates than larger firms on average.

“On a strategy-specific basis, administrators expected equity strategies to be the fastest-growing group within the hedge fund space, followed by event-driven, credit and multi-strategy funds,” the report states. Expectations from administrators fell roughly in line with trends seen in eVestment’s asset flow data.


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