Fortis Prime Fund Solutions’ receipt of the Best Hedge Fund Administrator award at the 2010 Hedgeweek Awards is a result of our uniqueness. What has differentiated us from other brand name administrators over the past year has been the focus that we placed on our clients, understanding that it is during times of difficulty that the strongest relationships are built.
We realised very early on that although our income would fall as a result of contraction in the industry, we would benefit over the longer term if we increased our service provision to help clients survive the crisis. While other administrators either raised their fees and/or reduced staffing levels, PFS has honoured all of its obligations (including finance facilities) during the period and has continued to invest in both technology and human capital.
The past few years have seen a move toward the institutionalisation of the administration process. Clients now expect a consistent error-free process supported by advanced IT infrastructure. Administrators are also far more transparent about their operations and financial health, encouraging hedge fund managers to visit their offshore offices and make informed decisions about the counterparty risks that they present.
Following the failure of Lehman Brothers, administrators – like all service providers – need to be far more transparent about themselves. The important characteristics of successful firms are strong operational infrastructure, staff that are experienced in hedge fund administration (not just ‘fund’ administration), and global networks of offices enabling consistency of servicing in multiple jurisdictions.
PFS stands out in the expertise that we have in areas such as advising on innovative fee and liquidity structures set by funds, gating, side-pocketing, redomiciliation and restructuring of funds. This expertise allows us to go over and above what most fund managers generally expect of their administrator.
Furthermore, we believe that we have the most robust relationship management model in the industry, which not only allows better planning for the business growth of our clients but enables us to understand better the issues and trends in the industry.
Our actual process is not totally dissimilar to those of other large SAS 70-audited firms, although we do place great emphasis on oversight by experienced employees. However, we are one of the few firms to offer genuine 24-hour processing capabilities thanks to best of breed technology coupled with highly qualified and trained staff in multiple jurisdictions.
PFS is currently developing its middle office capabilities for both single manager funds and funds of hedge funds. Although a small number of administrators do already offer middle office-type services, they are generally seen by most funds as second choice to having them in-house.
Many of the existing middle office providers also have areas of limitation to their operating models. We see a huge opportunity for any firm that can enter this market by providing a good quality service with excellent operational standards. We are also building out our private equity capabilities and plan to begin offering our existing services to Guernsey-domiciled funds.
Charlie Woolnough is European regional director of Fortis Prime Fund Solutions