Hedge Fund Admin Duties


The primary task of a fund administrator is to independently calculate the net asset value of a fund on a monthly basis. In order to do so confidently the Fund Administrator needs to be able to:

  • Verify that trades/subscriptions/redemptions took place in reality and were settled correctly
  • Verify that the investment manager used fair pricing while purchasing or selling the assets

Verifying the trades is usually accomplished by comparing the books stored by the investment manager with that of a broker used by the investment manager. Subscriptions and redemptions are verified much the same but instead of broker books agent books are used. Among commonly used verifiers are CUSIP, ISIN, SEDOL and SYMBOL. One of the bigger challenges during this stage is to cross-reference securities reported by the investment manager against those reported by the broker. The financial industry still doesn’t have a common security identification code and investment managers trading through multiple brokers are likely to have a slightly different internal set of identifiers than the one in use by brokers. So in order to do reconciliation correctly, a fund administrator needs to be able to freely switch between CUSIP/ISIN/SEDOL or any other identifier and fill in the blank ones if needed.

Verifying asset pricing is tricky as well. Listed instrument prices are public and could be obtained from well-known data vendors such as Bloomberg, Reuters or InteractiveData. However, OTC instruments are a different story and need to be priced by hand using some kind of an analytical toolkit like Numerix. Moreover, some asset classes, such as various hedge funds, cannot be priced by hand at all and the only way to verify their prices is to independently request NAV from them. Since hedge funds typically publish NAV in a PDF format and very few automated integration options are available for those wishing to invest into hedge funds, fund administrators specializing in fund of funds sector need a document management solution which would allow them to keep track of incoming hedge fund pricing documents, extract necessary prices and keep track of associations between a source PDF and extracted data for integrity and compliance purposes.

Once the investment manager books have been verified and net asset value calculated, the results need to be delivered to the fund shareholders directly or through the handling agent. Investment managers typically expect the fund administrator to aid them in the process, so the fund administrator needs to provide a robust way to publish and deliver reports and guarantee that they aren’t tampered with during delivery.

The minimal toolkit required by the fund administrator consists of:

  • Reconciliation
  • Reporting
  • Analytics
  • Security Master
  • Price Master
  • Corporate Action Master
  • Document Management (relevant for private equity and fund of funds administrators)


Reconciliation module must compare positions/trades/subscriptions/redemptions between the investment manager and the broker/handling agent. In order to do so it needs:

  • Integration with the order and portfolio management system in use by the investment manager
  • Integration with brokers and handling agents
  • Integration with Security Master for instrument cross-reference
  • Integration with Price Master for price verification for publicly traded instruments
  • Integration with Analytics for price verification for OTC instruments
  • Position/trade/subscription/redemption matching engine which could be quite complicated in terms of performance if the investment manager firm is really large ,maintaining thousands of positions simultaneously
  • Flexible data grid which allows sorting, filtering, grouping, field re-ordering and various drill-downs to help the user understand the reconciliation results

In addition to this, larger fund administrators with many users also require:

  • A ticketing system to track reconciliation breaks and fix them
  • Review and approval workflows allowing supervisors to keep track of the process


Reporting must allow fund administrator to calculate the fund’s net asset value and deliver resulting reports to its shareholders. At minimum this involves:

  • Integration with portfolio management system in use by the investment manager
  • Integration with Security Master for instrument cross-reference
  • Integration with Price Master for public instrument pricing
  • Integration with Corporate Action Master for corporate action entitlement processing
  • Integration with Analytics for OTC instrument pricing
  • Calculation engine to aggregate trades into positions and calculate net asset value for given dates
  • Reporting engine to generate necessary reports with the investment manager and/or shareholder specific customization to layout and presentation

In most cases, the investment manager also expects fund administrators to help with report delivery, which must include:

  • Report distribution engine supporting all kinds of communication (email, snail mail, website publishing)
  • Web-based front-end for report access
  • Document watermarking and tamper protection in order to guarantee the authenticity and integrity or reports
  • Document re-distribution restrictions in order to prevent leaks of confidential information


Analytics must permit the fund administrator to independently price any OTC instruments its customers might be interested in. At minimum this involves:

  • Integration with Security Master to fetch full underlying instrument details
  • Integration with Price Master for fetch reference market prices which could be required by calculation engine
  • Calculation engine
  • Integration with well-known analytical providers, such as Numerix

Security/Price/Corporate Action Master

Security/Price/Corporate Action Master must provide complete information for existing publicly traded instruments including full terms & conditions, prices, past and upcoming corporate actions. It may also provide company directory, facilitate industry classifications and include any other additional security/price/company data. At minimum the following is required:

  • Centralized security/price/corporate action/company data store
  • Integration interfaces for posting into data store and retrieving information from it
  • Integration with well-known data vendors like Reuters/Bloomberg/Interactive Data

Document Management

The document management system must allow the fund administrator to collect, store, retrieve and process source price documents and instrument contracts containing terms and conditions. At minimum the following is required:

  • Centralized document database
  • Document indexing and classification engine allowing users to navigate the document collection

For large fund of funds customers gathering and independently verifying hedge fund prices may become quite time-consuming, so an automated PDF processing engine allowing users to markup relevant parts of documents for automated processing could be very beneficial.

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