Fund Administration

Definition of Fund Administration: Fund administration is name given to the set of activities that are carried out in support of the actual process of running a collective investment scheme, whether the scheme is a traditional mutual fund, a hedge fund, Pension fund, unit trust or something in between.

Managers of funds often choose to outsource some or all of these activities to external specialist companies; these companies are often known as fund administrators.

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These administrative activities would include:

• Calculation of the Net Asset Value (NAV) including the calculation of the funds income and expense accruals
• Preparation of semi-annual and annual accounts
• Maintenance of the fund’s financial books and records
• Payment of the funds expenses.
• To reconcile Daily and Monthly Broker Statement
• Settlement of daily Trades, assuring that the proper dividend and interest are received, updating price of securities of client.
• Pricing of Security
• Calculation and payment of dividends and distributions (if required)
• Supervision of the orderly liquidation and dissolution of the fund (if required)

Specific activities that definitely do not fall under the name of fund administration are those directly associated with the business of running a collective investment scheme:

• Gathering assets (i.e. seeking additional investors into the fund)
• Asset management (i.e. deciding how to spend the money that investors have put into the fund in order to obtain the best return for that investment)

In the view of some fund managers any task necessary for maintenance of the fund that does not fall into one of the two categories above could be classed as fund administration and could potentially be a candidate for outsourcing.

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