[ S U R V E Y
|
H E D G E
F U N D
A D M I N I S T R AT I O N]
State Street
S
tate Street has happy clients, but not many of them have vot-
ed in this survey. Though the respondents include high-scor-
ing firms at both ends of the size spectrum, they are lost in the
averages. The net result is an aggregate outcome lower than its
predecessor for a third year in succession. In fact, not a single
score clears the survey benchmarks. True, the sample is not
large, and may be self-selected. Certainly, the client comments
refuse to flatter the bank on client service (“You always have to
call and email few times in order to get an answer”), or banking
services (“It is very troublesome procedures to make instruc-
tions to make payment to pay fees and expenses”) or fund
accounting (“State Street requires hand holding on occasional
accounting transactions”). One client attributes his service
problems to a failure to retain staff. “High staff turnover, and
therefore you have to work from the beginning with a new per-
son every few months,” he writes. A second client, who cites the
same issue, reckons there is a structural component too. “Their
operations are a bit separated and, due to poor communication,
you never know which team helps you on which part of your op-
erations,” he writes. “You could not even reach a specific person
to solve your problem.” A third has also encountered a “poor op-
erations set-up, people are not responsible, and you always have
to reach different persons for different parts.” State Street is of
course in the middle of a major cost-cutting exercise designed
to improve its profitability, and this may account for some of the
service gaps clients are experiencing. The recently announced
acquisition of Charles River Systems indicates the bank is now
interested in servicing the front-office end of the asset manage-
ment industry, as well as its back- and middle-office..
hted
rage scores
average scores
2016 5.58
5.58
2017 5.07
5.07
2018 4.92
4.92
ondent
rofile profile
fund
33%
gers
um-
und
gers
fund
gers
cas
e and
e East
17%
33%
2016
5.58
50% 50%
58% 58%
17% 17%
25% 25%
2017 2018
5.07 4.92
By size
17%
50%
2016 2017
5.58 5.07
2018
4.92
PROFILE OF RESPONDENTS
By location
33%
33%
Large
Medium
Small
50%
17%
25%
25%
58%
17%
58%
17%
17%
hted
rage scores
average by scores
service
by area
service area
Weighted Weighted
+/- the Weighted
global
+/- the average
global scores
e area
average score
average
average
score average
2016
service 4.92 5.58 -17.80%
4.92
-17.80%
oarding 4.52 4.52
-24.90% -24.90%
nting
or
es
4.33 4.33
-24.20% -24.20%
70
Global Custodian
5.49 5.49
-11.50% -11.50%
2017 2018
5.07 4.90
The Hedge Fund Annual 2018
Americas
Europe and
Middle East
Asia
Methodology
The 2018 Hedge Fund Administration Survey asked re-
spondents to address 59 questions across 18 service areas
(See Table 1). Scores for a 19th category, Future Relation-
ship, were not included in the total calculations presented
here. For the majority of questions, respondents were
asked to assess their administrators by determining how
much they agreed or disagreed with a series of state-
ments about services. Respondents were also given the
option to provide one overall assessment of a service
area rather than answering individual questions. For each
service area, respondents were also invited to provide
commentary. A total of 930 completed questionnaires
were received on behalf of 37 fund administrators. After
clean-up and validation, 902 responses remained. In order
to receive a full write up in the survey, an administrator
needed to receive at least 10 responses. Five responses is
the minimum sample number required to assess a service
provider adequately enough to publish their average
scores, both in absolute terms and relative to the average
scores in each service area. As a result, we were able to
provide full write ups for 12 separate administrators and
shorter commentary on an additional three. The analysis
published in this report is based on average scores given
by respondents. They are weighted for the size (measured
by assets under management, or AuM) and complexity
(measured by the number of asset classes and investment
strategies pursued) of the respondent. Scores for any
question or service area attracting less than four respons-
es are excluded from the calculations. The suppression of
scores for this reason does not mean the provider does
not supply the service in question; it means only that an
insufficient number of respondents scored the service to
assess its quality with confidence.
We are most grateful to all fund managers who took the
time and trouble to complete a respondent questionnaire,
as well as to the hedge fund administrators who encour-
aged their clients to do so and who completed a provider
questionnaire of their own. As a thank you, hedge fund
managers who participated in this survey are entitled to a
free benchmarking report comparing their assessments to
those of peers using the same service providers. This will
be sent by McLagan to all respondents automatically.