NEEDHAM, Mass. — Hedge fund administrators will spend $144 million on technology in 2005 and as much as $250 million in 2008, when hedge fund assets will likely top $2 trillion, according to a series of new reports by The Tower Group. Prime brokers, on the other hand, will likely spend $900 million on technology this year and more than $1 billion in 2008.
The firm also predicts hedge fund managers will spend more than $2.5 billion in 2008 on administration and service expenses as assets rise more than 75% from about $1.2 trillion under management now.
More than 50% of global hedge fund assets are administered by five firms, according to TowerGroup data: Citco Fund Services; Fortis Prime Fund Solutions; BISYS Hedge Fund Services; HSBC Alternative Fund Services; and International Fund Services, a division of State Street Corp.
Additionally, TowerGroup's top global prime brokers, ranked by assets under administration, were Morgan Stanley, Bear Stearns, Goldman Sachs, UBS and Banc of America.