Alternative assets under administration (AUA) stood at USD6.862 trillion at the end of 2014, compared to USD5.873 trillion at the end of 2013, according to eVestment’s Alternative Fund Administrator Survey 2015.
For the report, eVestment surveyed administration firms serving hedge funds, funds of hedge funds, private equity funds, real estate funds and liquid alternatives funds.
Total private equity and real estate funds AUA saw a big jump, up 23.7% year-over-year for a total in 2014 of USD1.580 trillion. That likely represents less than half of the overall growth on a dollar basis in private equity and real estate assets as survey participants estimated that 60% to 70% of private equity and real estate fund assets are still administered in-house.
While in-house administration is not very common with private equity and real estate funds, survey participants believe regulatory burdens and investor interest having an additional level of transparency and expertise will likely drive increased outside administration at these funds.
Adoption of outside fund administration is almost universal among hedge funds, funds of hedge funds and liquid alternative funds.
Across the board, institutional investors and globalisation are driving a good bit of the increased AUA for alt fund administrators. Institutional investors are insisting on transparency while investment managers are looking for expertise in local and global regulatory and compliance issues as their investment strategies become increasingly global.
Almost all participating administration firms expected the number of administration firms to fall as merger and acquisition activity continues to consolidate the administration industry.
