Fund Administrator Ratings
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Institutional investors are expanding their use of alternative investment strategies, and especially hedge funds, with many choosing to invest through funds of funds. The collapse of Lehman Brothers in September 2008, and the Madoff fraud that was first exposed in December that year, have highlighted the need to ensure that assets belonging to investors are held in custody safely and securely and that net asset values prepared by fund accountants are based on thorough reconciliation with prime brokers that act as custodians, and with fund administrators and any third party custodians. The Thomas Murray fund administrator ratings offers institutional investors reassurance that the hedge fund administrators which reconcile their holdings with prime brokers, and calculate the net asset value of their investments in hedge funds or funds or funds, follow industry best practices.
It is an independent assessment by Thomas Murray of an administrator to hedge funds or funds of hedge funds, which leads to an overall rating on the familiar AAA to C scale. Ratings are also provided for the two main service areas – fund accounting and transfer agency – in the alternative fund administration industry. Ratings are commissioned by fund administrators themselves, which can choose to keep their rating private or publish it.
The main services assessed include the pricing of investments for the purpose of calculating Net Asset Value (NAV), the timeliness and accuracy of the NAV calculation process itself, the accuracy with which performance fees are allocated between investors through equalisation or series accounting, the timeliness and accuracy of the netting of fees in NAV calculations, the accuracy of reconciliation with hedge funds and prime brokers, and the preparation of information for audit purposes.
The main services assessed are the timeliness and accuracy with which subscriptions and redemptions are executed and recorded, the regularity and accuracy with which the register of investors is updated and maintained, the thoroughness of the application of know-your-client (KYC) and anti-money laundering (AML) regulations, and in how timely and complete a fashion the administrator resolves queries by investors.
If you would like to purchase any of these services, or find out more about them, please contact:
Roger Fishwick at rfishwick@thomasmurray.com or call him on +44 (0) 20 8600 2300
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