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From Kirsten Bischoff, Opalesque New York: In a recent Celent report concluding a study of trends in the hedge fund industry by looking at the changes and drivers of fund administrators it was noted that a “battlefield” mentality exists amongst outsourcing firms looking to capitalize on the industry growth. However, a review of the finer points of the study, and conversations with Andrew Dougherty, COO of Alternative Investment Fund Services at BNP Paribas Financial Services and Robert Schaeffer, Managing Director of Equity Fund Services drew a slightly different picture.
Opalesque came to find that as the industry rockets forward in growth, hedge funds tend to diverge down either of two paths, each one with their own requirements of support service. As such, two distinctly different hedge fund needs are being met by administrators each approaching the same goal of superior service through different philosophies.
Different approaches – the barbell effect
The conclusion of the Celent report looks for the brisk pace of evolution within the hedge fund administration space to stay steady, and perhaps even accelerate. It also cites the concept of continued “barbelling” within the space. Which is “further institutionalization of hedge funds will lead to a two tiered market with large multi service administrators on the one hand and niche players left to service startups and independent boutiques.”
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