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Fund Administration refers to a set of activities carried out by in the running of a mutual fund, SICAV, unit trust, pension fund or other collective investment scheme. Typically, fund administration comprises two parts: fund accounting and the activities of registrar/transfer agent.
Fund administrators are intermediaries who maintain a fund's books of account as well as its share register. Typically, they ensure that: a fund's investments reflect its stated strategies as per the original offering documents; all trades are captured in the books of account; asset valuations are current and calculated independently; and accruals are stated accurately, reflecting current knowledge of future cash flows.
Importantly, administrators check that net asset value (NAV) calculations and attributions of income are accurate and error-free. The NAV is the main driver for the fund manager's performance fee and also provides a per unit value for the fund. The administrators' duties may encompass ensuring that investments into the fund comply with 'know your client' (KYC) and anti-money laundering (AML) regulations. In some cases, fund administration extends to the provision of guidance on structuring a fund and its associated documentation and guidance on the tax consequences of different fund structures. A sophisticated firm of administrators draws on a very broad base of skills.