If you`re looking to invest in a fund, you may come across a fund administration agreement as part of the documents you need to sign. But what is it exactly?
Simply put, a fund administration agreement is a contract between the fund manager and the fund`s administrator that outlines the services the administrator will provide to the fund. These services can include things like accounting, record-keeping, and reporting to investors.
One of the key benefits of having a fund administrator is that it helps to ensure the integrity of the fund`s operations. By outsourcing tasks like record-keeping and accounting to a third-party administrator, the fund manager can focus on making investment decisions without getting bogged down in administrative tasks.
Another important component of a fund administration agreement is the fee structure. Fund administrators typically charge a percentage of the fund`s assets under management as their fee. This fee can vary depending on the size and complexity of the fund, as well as the specific services being provided by the administrator.
One thing to keep in mind is that while the fund administrator is responsible for certain tasks, the ultimate responsibility for the performance of the fund lies with the fund manager. The administrator is essentially a service provider, and it`s up to the manager to make smart investment decisions that will benefit the fund`s investors.
Overall, a fund administration agreement is an important part of the infrastructure that supports the fund industry. By clearly outlining the roles and responsibilities of the fund manager and administrator, it helps to ensure that investors are being well-served and that the fund`s operations are running smoothly.