Administration of hedge funds on the rise

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.