Prior to the global financial crisis, the investment fund industry was focused mainly on revenue growth, on the back of good returns based on an ever-widening range of fund structures, asset classes and global jurisdictions. In the light of current reduced returns, the industry’s focus is more on cutting costs. As a result, reduced cost of IT ownership and operational efficiency from a common processing model are high on the agenda, often facilitated by platform consolidation to remove the cost of a patchwork of systems and processes, says Keith Hale (pictured), global head of transfer agency at Multifonds.
Coupled with this, the distinction between hedge funds and traditional mutual funds continues to be eroded, as hedge funds look for more regulated structures to facilitate upcoming trends and legislation such as the EU’s Alternative Investment Fund Managers Directive. Similarly, traditional mutual fund managers are increasingly incorporating hedge fund-style performance fees into their charging structure, hence the growing demand for alternative Ucits – the so-called Newcits funds.
Both result in the need to ‘merge’ the processing model – for example, to support flexible performance fee calculation and the associated investor equalisation at mutual fund levels of scale, but at the same time support daily valuation, distribution and commission processing normally associated with mutual funds.
Against this background, governments are responding to the crisis with increasing levels of new regulation that can be costly to those needing to update their software continually. This is particularly true within the transfer agency industry, where there are still many examples of in-house systems. Furthermore, in the wake of the 2008 Madoff scandal, fund managers, particularly in the US, are increasing outsourcing middle and back-office functions to third-party administrators.
All of these pressures call for investment fund software that is uniquely flexible and scalable across global networks, jurisdictions, asset classes and fund structures. At Multifonds, we provide a common investment fund platform that does just that. It includes fund accounting, transfer agency and portfolio accounting products aimed mainly at the needs of top-tier fund managers, third-party fund administrators and global custodians.
Our focus is on helping clients grow their businesses into new fund types and jurisdictions, while reducing costs by consolidating platforms and operating models. For example, we estimate that the costs associated with maintaining existing functionality and incorporating new regulation using Multifonds is between a quarter and a tenth that of an in-house system, largely due to development economies of scale.
Founded 15 years ago as IGEFI, this September we rebranded as Multifonds to unify our brand and demonstrate our focus on our product. Our common platform for fund accounting and transfer agency is used by some of the world’s leading institutions such as BBH, BNP Paribas, Citi, Credit Suisse, HSBC, Northern Trust, RBC Dexia, SocGen and Union Investment. In addition, in 2009, we launched Multifonds Portfolio Accounting to support our customers’ expanding middle-office requirements, including real-time valuation, position-keeping and investment accounting.
Multifonds employs more than 300 people and has offices across Asia, Europe, and North America. The software covers more than 25 fund jurisdictions and a broad spectrum of asset classes and fund structures, processing more than USD2trn in assets across the globe every day.
This is a time of change for investment fund industry and particularly the transfer agency business, and we intend to remain right at the centre of those changes.
Click here  to download a copy of the Hedgeweek Luxembourg Hedge Fund Services 2010 special report