Demand outlook for alternative fund administration bullish

Financial pundits positively forecast that market forces are fast becoming partial to a bullish outlook in alternative fund administration as trends in the asset management industry head in the direction of growth. 

Image source: PWC.com

Topping the factors for expansion are the revised regulatory reporting requirements, e.g., AIFMD, Solvency II, and Form PF, that turn to be more stringent brought forth by series of huge financial misdemeanors by so-called leaders in the industry. 

There is likewise the ballooning hike in assets under management (AUM), which is anticipated to go beyond $900 billion in the succeeding year. The alternative fund administration industry has the potential to ensnare cumulative returns not lower than two-thirds of this amount. Moreover, industry reports state the U.S. addressable market for private equity administration to be at more than 70 percent of invested capital, which runs to $1.7 trillion. Though private equity outsourcing is currently at 30 percent, if developments in the realm of high finance remain stable, a 50 percent level by 2018 is a promising outcome. The preceding years’ financial crunch as well as on the insistence of institutional investors drive asset managers toward cost-efficient operations. Hence, alternative fund administrators are equally challenged to develop novel services models that would spell minimization of risks and expenses amidst maximized profit targets. 

As these trends progress, the pressure on alternative fund administrators is to present lucrative options depending on financial variables such as size, ownership structure, and service mix. To wit, small capitalized administrators may zero in on the enhancement of their core competencies towards streamlined but cost-efficient operations. 

On the other hand, administrators with bigger and more stable capital at their disposal are expected to be more aggressive in the market and pursue strategies that would ensure shareholder value creation while concurrently sustaining competitive advantage. 

Image source: AmericanProgress.org

PartnersAdmin LLC was established in July 2008 with the intent to provide a quality, outsourced solutions to meet the dynamic back office needs of the alternative fund industry. Scott Tominaga is its Chief Operating Officer. To learn more about the company, visit this website.