The opening of a new office in Toronto at the beginning of March is the latest step by UBS to extend the scope and reach of its Hedge Fund Services division, which already has more than $108bn in assets under administration, by complementing the group's existing hedge fund administration facilities in the Cayman Islands and Dublin and an office that is being considered in Asia.
The new office is located within the UBS building in Toronto's business district, taking advantage of the bank's existing infrastructure alongside its investment banking, wealth management and asset management businesses.
The Hedge Fund Services business in Toronto has been able to hit the ground running, thanks to the presence of a number of skilled hedge fund administrators involved from the outset - including Canadians who have been working in UBS's Cayman office and who have opted to relocate. That means the office is able to draw on an experienced core of employees who know how the business model works.
Together with the facility in Grand Cayman, which has a staff in excess of 130, the Toronto office offers a full range of administration services for hedge fund clients throughout the Americas. In addition to offering an alternative, onshore location for the administration of funds from the region, it will also offer full business recovery and continuity facilities to cover for any disruption in Cayman, which lies in the Caribbean's hurricane belt.
Toronto is a leading financial services centre in its own right and the centre of Canada's fast growing hedge fund industry. It has a strong concentration of corporate headquarters and a full range of professional services businesses, and enjoys the widespread availability of the accounting, audit and legal skills increasingly in demand by the hedge fund industry and the firms that service it.
Location of administration services is an important issue for managers, many of whom prefer an onshore provider and appreciate being able to visit their administrator in a day's round trip. Toronto is just an hour's flying time from the tri-state area of New York, Connecticut and New Jersey, the largest single concentration of hedge fund managers in the US, and close to other financial centres on the east coast. For the time being most demand for the services of the Toronto facility will come from the US, although in the longer term the development of the Canadian hedge fund industry may also be a significant source of business.
With an established long-only fund administration industry, a burgeoning hedge fund services sector and a significant presence on the part of the 'big four' professional services firms, Toronto is well supplied with qualified and experienced personnel, especially in areas such as accounting. Its cost structure is competitive compared with other major centres for hedge fund services, and there is not the same problem of high staff turnover found in some parts of the US where hedge fund administrators regularly are lured away by start-up managers.
By Sean Flynn Sean Flynn is managing director and head of Hedge Fund Services at UBS