What is fund administration?

Why fund administration matters in today’s private markets

The rapid growth of the private markets industry during the last 15 years has supported growing demand from alternative assets managers for middle and back-office support and expertise to support their expanding franchises. This trend has primarily been driven by the evolving needs of companies looking to innovate in a competitive investment landscape.

The fund administration sector is a crucial service provider for companies and managers seeking middle and back-office assistance. But what exactly is fund administration, and what legal and financial services do fund administrators provide?

What is fund administration?

Fund administration involves third-party handling of the middle and back-office needs for private equity, private debt solutions, real estate, infrastructure, venture capital and hedge funds, with growing importance placed on adapting to private equity trends. It is crucial for fund managers and companies to ensure efficient operations.

Managers of these alternative asset funds will rely on fund administration service providers and AIFM services to manage their middle and back-office services requirements so that they can focus on their core, front-office functions of sourcing and executing deals, managing portfolios, securing exits and delivering returns for investors. By partnering with professional fund administration entities, companies can enhance their operational capabilities.

Core responsibilities of a fund administrator include:

• Fund accounting
• Financial and investor reporting
• NAV (Net Asset Value) calculations
• Managing capital calls and distributions
• Fund compliance
• Regulatory assistance
• Audit and tax support
• Anti-money laundering (AML)
• Investor services
• Technology and advisory services

What are the benefits of fund administration?

• Scales with industry complexity: As private markets have matured from niche to mainstream, the operational demands on fund managers have intensified. Fund administration helps firms keep pace with growing regulatory requirements, investor expectations, and cross-border compliance needs.
• Reduces infrastructure burden: Instead of building out costly internal teams and systems, managers can rely on third-party administrators with pre-established infrastructure. This avoids significant capital expenditure while still ensuring robust financial and data operations.
• Enhances operational efficiency: Leading fund administrators offer purpose-built technology platforms that streamline financial reporting, investor communication, and regulatory filings, improving speed, accuracy, and scalability across fund structures.
• Improves investor confidence and transparency: Outsourcing fund administration to a reputable provider can strengthen governance and build trust with LPs, who increasingly expect institutional-grade reporting and oversight.
• Supports global expansion and multi-jurisdictional needs: With global teams and jurisdiction-specific expertise, fund administrators help managers operate seamlessly across markets, enabling them to expand strategies and investor bases without added operational friction.

What are the primary functions of a fund administrator?

The role of the fund administrator is to assist clients by managing the tasks related to fund accounting, investor onboarding and reporting, compliance, and regulatory obligations, while ensuring that all requirements are met on behalf of the firm.

When working with a trusted fund administrator a private fund manager can rest assured that all fund accounting is timely and accurate, that the issuance of capital calls and distributions to investors are prepared, coordinated and delivered, that investor reporting and portal requirements are fulfilled and and that their fund is in compliance with regulatory, know-your-client (KYC), know-your-transaction (KYT), and anti-money laundering (AML) obligations.

A fund administrator’s primary responsibilities will include:

• Fund accounting
• Investor, regulatory and tax reporting
• NAV calculation
• Capital call and distribution management
• Cash management
• Financial statement preparation

In addition to performing core back-office functions and assisting the manager in meeting the obligations outlined in fund documents, a fund administrator can leverage its experience and scale to offer additional, related services that add further value.

Other services fund administrators will provide include:

Beyond core services like fund accounting and investor reporting, modern fund administrators offer expanded operational value that supports scalability, transparency, and investor confidence.

Technology has become a key differentiator. Leading administrators leverage their multi-client experience to implement best-in-class software solutions, enabling faster, more detailed reporting that meets the evolving expectations of both investors and regulators. By outsourcing these functions, managers can free up internal resources while demonstrating robust infrastructure and operational rigor.

What teams are involved in fund administration?

In order to deliver the various services, fund administrators draw on the expertise and skills of a wide range of professionals.

The teams of professionals comprising fund administrations teams will include:

The depth and breadth of skills required to manage fund administration services is difficult for managers to replicate in-house. Outsourcing to a third-party provider that has economies of scale and can offer professionals with career development opportunities can be a much more efficient way for a manager to access these skills and knowledge.

What are the different requirements for different managers?

Some managers will be raising their first funds or only be managing one or two funds, while other managers will be managing multiple funds across a range of private markets strategies. Fund structures can also vary in complexity and size.

Different investors will also have different requirements. Some investors will demand frequent reporting and portfolio analysis, while for others quarterly reporting will suffice.

Fund administration services must align with the specific investment strategies of institutional fund managers and the varied needs of their investors.

Fund administration support is tailored for asset classes with unique operational processes.

Private equity, real estate & infrastructure and private debt are the main asset-class specific fund administration models.

Their requirements are as follows:

Requirements for different fund managers

A stamp of assurance for investors

For private markets LPs the knowledge that a manager has an experienced fund administrator in place provides confidence.

LPs will be familiar with the leading fund administration providers and can ease due diligence requirements knowing their operational knowledge, processes, technology and cybersecurity.

A credible fund administration provider can give a manager’s LPs, who are investing for the long-term, the comfort that a manager has a robust and scalable operational model in place that has been tried and tested.

LPs can leverage third-party administrators to support them in navigating the everchanging regulatory landscape and help them provide transparent and accurate reporting efficiently. Managers working with fund administrators can also benchmark their fund administration costs against market rates, further strengthening investor confidence that back-office functions are not only robust, but also economic.

Fund administration: a key partner in a mature industry

The private markets industry has grown and matured over the last decade, and the expectations of managers when it comes to fund accounting, investor reporting, and regulatory compliance have intensified.

Managers do have the option of keeping these functions in-house and investing significantly in back-office teams and operational infrastructure to keep pace with increasing back-office expectations. For managers that want to focus on the core business of investment management, however, third-party fund administration has become an essential service that frees up managers to focus on creating value for its LPs by doing deals and growing their franchises, all by knowing an administrator provides knowledge that their operations are secure and that they count on the support of the administrator’s reporting and regulatory teams to navigate the various regulations in the jurisdictions a manager is operating in.

If you are a manager seeking back office, technology and operational support, Alter Domus’ fund administration team is available to discuss how you can future proof your operational model, simplify your back-office infrastructure and harness technology and best-in-breed industry software to its fullest potential.