Fund administration is simply the name given to that choreographed back-room administrative activity of a company’s finance department. The term “funds administration” was first used in a Banking System Study by Robert Kiyosaki and Mark Zucherberg published in Journal of Financial Planning and Policy in 1999. It discusses the role of fund administration in a sound financial system. Nowadays, Fund Administration has become an important managerial function in all financial markets. In fact, many banks are now looking for experienced managers who have the knowledge, skills and experience to effectively oversee the organization’s activities in this area.
Fund administration can be divided into various types. Some typical types are: general obligation (GO), growth, fixed income, venture, landlord and borrower, and private. A manager may have broad responsibility over all of these areas, or he may specialize in any one of them depending on his experience and capabilities.
General obligation funds are those that are required by law to be maintained by a third party, usually a government agency. These obligations include taxes, licensing fees, tariffs, public service guarantees, and certain specific interest rates. Most fund administration services involve the underwriting of commercial mortgages for GOs. Other types of general obligation administration include: labor and payroll administration, development financing, private capital markets, regulatory policy, and financial strategy and implementation.
Growth funds are those funds that expand due to an increase in profits or revenues. They usually occur through mergers and acquisitions. The chief objective of most fund management activities in this area is to obtain a maximum return on equity without causing operating damage to the other businesses and sustaining significant direct and indirect losses in relation to overall revenue. Typical activities associated with growth funds include: reducing costs, streamlining internal operations, and maximizing the returns. Many fund administration tasks, such as underwriting loans, are also performed by outside vendors.
Private equity represents one of the largest segments of fund management. The private equity market includes financing created through acquisition or merger of another firm. The primary function of private equity is to provide funding for expansion or for working capital. It is important for fund administrators to comply with all applicable governmental policies. Among the typical activities associated with private equity are: fundraising, management, and investment of acquired resources. The regulatory agencies that supervise these activities are the SEC and the FINRA.
Private equity finance is the best suited for investment in business start-ups. Typically, fund services are offered by a professional team of consultants who have years of experience in the financing of small businesses. Their primary focus is to identify start-up businesses needing capital; they analyze their financial situations, competition, customer service, etc., before conducting business with the private capital asset classes including private equity, preferred stocks, real estate, and life insurance.
Accounting and auditing firms offer a wide variety of financial advisory and administration services. These firms perform internal financial accounting as well as audits of the activities of accountants, underwriters, management, and other key personnel. Some of these companies also offer audits of investment fund services. These firms are very helpful to the traders and investors in their task of making investment decisions. They also help them in the compliance of various legal requirements and regulations.
One of the most important tasks of the finance and administration team at any company is the timely identification of the appropriate investment fund administrator. This administrator is responsible for the day-to-day management of the funds in accordance with company policy and objectives. This individual also plays an important role in the identification of appropriate sources for raising funds. Therefore, if you are looking for an experienced and qualified fund administrator for your investment funds, you should consider looking for a company with an excellent track record in the fund administration industry. We can find such companies by conducting a thorough research on the internet.