Disclosure regulations in the U.S. and Europe have helped boost business for hedge fund administrators in the first six months of this year, with single-manager assets under administration increasing 13.3% to $3.411 trillion as of June 30, according to a survey by eVestment LLC.
Also helping drive the increase has been organic growth of firms, particularly those among the top 10, and overall hedge fund performance, said Peter Laurelli, New York-based vice president and head of research at eVestment.
State Street Corp.'s alternative investment solutions group had the highest total hedge fund assets under administration for the first six months of the year among the 38 single-manager administrators surveyed. The State Street unit had $682 billion in AUA as of June 30, up 8.7% from Dec. 31; followed by Citco Fund Services at $532 billion, up 5.35%; BNY Mellon Alternative Investment Services, $445.75 billion, a 25.56% increase; SS&C GlobeOp, $395 billion, up 20.43%; and Citi Hedge Fund Services Ltd., $243.48 billion, up 15.41%.
Morgan Stanley Fund Services, Northern Trust Hedge Fund Services LLC, HedgeServ, SEI Investments Co. and J.P. Morgan Global Fund Services rounded out the top 10.
The impact of Form PF in the U.S. — requiring hedge funds with more than $5 billion in assets under management to disclose holdings and investor information — and similar rules through the European Union's Alternative Investment Fund Managers Directive, has been a boon to the biggest administrators, Mr. Laurelli said. He said the regulations on hedge fund managers make reporting “too daunting to go it alone. You have to get it right, and it has to be done on time. That technology burden has been laid on the administration industry. I think they're happy to be leaned on as a partner.”
Mr. Laurelli said larger administrators benefit more than those with less scale because they can handle the added cost of regulatory monitoring. “It's much harder for smaller firms to do because of the cost,” he said.
There were no shifts among the rankings of the top 10 fund administrators from six months earlier.