Opalesque Industry Update - Preqin’s global survey of over 100 hedge fund managers in December 2013 showed that managers have
frequently changed the service providers working on their funds, including fund administrators, prime
brokers, custodians, auditors and law firms. Almost half of respondents indicating they had switched service
provider at least once since their fund’s inception. Fund administrators and prime brokers are the most
frequently switched provider, and most commonly, dissatisfaction with the quality of service provided was the
reason given by fund managers for changing their service provider. |
Other Key Facts:
North American and European managers have been more active in switching service providers in
2013, with 35% of each changing service providers in the past year.
“Our recent study of fund managers shows that many hedge funds change their service providers; 45% of the respondents indicated they had switched service provider at least once since their fund’s inception," commented Amy Bensted, Head of Hedge Fund Products at Preqin. "Dissatisfaction with the quality of the service they receive is a common concern across all fund managers, and is a particular problem in emerging regions for hedge fund management, as the service provider sector may be less developed or has little local presence. There is certainly an opportunity for groups that can provide consistent, good service on a local level to appeal to this growing group of managers in Asia-Pacific and other regions outside North America and Europe.
For Europe-based managers it has been a challenging few years in terms of fundraising, and new regulations in the region have made it more costly to run hedge funds. As such, these managers are conscious of the need for service providers to provide good value for money. As their funds grow, North America-based fund managers tend to switch service providers to firms that are better able to cope with their scale. As a result, there is a clear opportunity for different types of service providers that can provide services to funds of different sizes, or are specialized in providing services for funds of a particular size.”
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