[ I N D E P T H | I N D E P E N D E N T A D M I N I S T R A T O R S ]
The fund administration market has boomed in the last decade , sprouting a fresh landscape of new providers , fund structures and services . Those at the top of the pile have taken full advantage of the purple patch , spawning a small clique of providers each now overseeing over $ 1 trillion worth of assets . Global Custodian ' s deputy editor , Chris Lemmon , looks at the reasons behind their success and the future grounds for growth .
While fund administration has been around for decades , the abundance of wealth and services did not flourish until the boom in the alternative assets space in the wake of the global financial crisis struck in 2008 . “ Fund administration used to be mainly finance , prime brokerage and all kinds of things that commercial and investment banks would supply to these hedge funds ,” explains Bill Stone , founder and CEO of SS & C . “ Often , they would not have alternatives , other funding sources or other ways to execute their strategies . “ Take , for example , a long / short equity hedge fund , which was the genesis of hedge funds . As they got bigger , the equity markets shrunk . So , they went into other markets – like private markets , private equity , private debt , distressed debt , or real estate , where they thought they could get better returns .” Fast forward a few years , and the alternatives market has sky rocketed . Data from Preqin shows that that the total alternative assets under management rose from $ 4.1 trillion in 2010 to $ 13.3 trillion at the end of 2021 – a figure that is expected to further accelerate to reach $ 23 trillion by 2026 . Bill Salus , co-founder and managing partner of Paddock Capital Markets , tracks the growth back to the legitimisation of alternatives , particularly in the US market . “ As alternative investments were legitimatised and became more transparent to investors , particularly institutional investors – and now to retail investors – it really became part of an asset allocation . “ Before that , there was a time where it was the wild west of investing ; it was very black box , very secretive . Investment strategies often included offshore jurisdictions that people didn ’ t know existed .” As the demand and popularity of alternative assets grew , so too did need for service
40 Global Custodian Fund Services Annual 2022