Gwyn Roberts

02/11/2011 Author: Gwyn Roberts

Editor's view: 2 November 2011

The merger last week of Opus and Agile, quickly followed by Abacus's purchase of Portal, reveals the current flux within hedge fund administration. Taken in isolation these are relatively small deals. But, considered against a wider backdrop, the tie-ups are the latest in a long-line of consolidation that reveals the pressure on all administrators to develop sustainability via scale.

As HFMWeek sends out its biannual AuA survey forms this week, we're expecting our own figures to back this up. The already big – particularly some of the bank-owned admin units – are anticipated to have experienced a surge in assets as funds look to them as a safe-bet.

We also predict a shrunken overall list. Many of the smaller admins we have tracked over the years have disappeared or been sucked into the orbit of larger players, as margins continue to be squeezed and funds become less reluctant to switch providers.

There is one ray of light for smaller managers: the flight to outsourced services. Many of the most innovative are fully aware of the challenges of winning new business and are doing their best to diversify. From middle-office services and reporting to shadow administration, there is still a definite niche available for best-of-breed smaller admins.

So, in November when we unveil our results, expect the big to be bigger, admins to be sparser on the ground, but the overall service offering to be better as firms look to offer more to hedge fund clients.

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