Hedge Fund Administration Survey 2017

Apex Fund Services is once again listed as a Global Outperformer in this year’s Global Custodian HFA survey.

This is an extremely important survey and subsequent award for the Apex Group as it is voted for by clients themselves and therefore truly represents a genuine accolade and achievement. The 2017 results show Apex listed as an outperformer in every single category.

Apex is delighted to receive feedback from clients confirming that it continues to deliver exceptional service across all jurisdictions worldwide. The Group is continually improving and evolving its services to ensure it always delivers the best possible solutions and the highest level of service in the industry.

Extract from the Global Custodian Survey Results:

Below, and in the provider write-ups that follow, readers will see reference to a range of scores from 1.0 to 7.0 with movements in percentage points between them. To help interpret these, a brief recap on what they represent may be helpful. Participants are invited to award a rating to their provider( s). The highest possible score, 7.0, is regarded as Excellent. If a set of responses from any single participant consists entirely of sevens, it will be treated as anomalous. Scores of 7.0 should be regarded as the exception.

As a rule, clients who are happy with the service they are receiving will rate most categories in the Good range (5.00- 5.99). Score of 6.0 and above suggest that the client is positively impressed. A score of Satisfactory (4.00-4.99) indicates that while the service in that area is considered adequate, it is the equivalent of “Could do better” on a school report.

This is where context comes in. If a provider is rated 5.00-5.99 across most service categories, but has one or two scoring in the fours, they are unlikely to find clients rushing for the exit, though they may have work to do to provide reassurance that they are working on their perceived deficiencies. It may also be that all potential providers have a similar ratings profile and that their incumbent is merely reflecting the market average.

Overall trends

The purpose of this survey overview is to identify trends in client perception across the survey sample and establish a benchmark to which the performance of individual providers can be compared. Table 1 shows overall scores by category compared to the last two years. In short, there have been improvements across the board and a return towards 2015 levels following last year’s dip. An average increase of 0.14 points has been recorded across the eight categories. The most visible improvement is in Value Delivered (+0.20), a category which encompasses opinions of both competitiveness of fees and value received for fees paid. Six out of the eight categories exceeded the 6.00 threshold, compared to only two last year.

A factor that may come into play in assessing the importance of a particular score is the relative priority given to a service category: a four in, for example, Relationship Management and Client Service is likely to be of greater import than the same score in one of lower profile service categories. This year, as last, Fund Reporting and Valuation is considered the top priority by over 40% of respondents, followed by Relationship Management and Client Service. Amongst Very Large clients, the former increases to 50%, while compliance, by all accounts a growing concern, does not feature in the top slot for any respondents in that size category.

The 2017 survey has also seen a surge in responses from medium- sized funds, totalling 579, compared to 503, 142, and 46 for small, large, and very large-sized funds respectively, giving medium-sized funds a relatively bigger weighting this year. Scores are less generous the larger the participant, since larger clients tend to have a more diverse and complex set of service requirements. This year saw a large disparity between the scores from larger clients and smaller ones, amounting to 0.68 for Value Delivered) and 0.84 for Relationship Management and Client Service. The general increase in scores across all categories is therefore partially a consequence of the surge in responses from smaller-sized clients this year.

The location of survey participants has remained consistent since 2015. North America, Asia and UK continue to provide the bulk of respondents. The tables on page 4 show the largest five providers for each client segment by size, based on their share of weighted responses.

Apex Fund Services

New deadlines and reporting requirements are driving HFAs to enhance their offerings. According to Apex, the administrators who are able to adapt their service models in such a context are the ones who stand to gain. With a significant increase in the percentage of weighted responses accounted for by Apex’s clients, the firm clearly plans to be among them.

Scores within the 6.00-6.99 (Very Good) category were achieved across the board, with the exception of Technology.

Increases were recorded year-on-year in all categories, resulting in an average 0.20 increase, overall.

Client commentary indicates Apex is perceived as well-placed, in an era of regulatory change and other pressures. One client notes that Apex “has significant presence in all jurisdictions with solid background of the regulations related to each jurisdiction.” Client Service in various parts of the world, including Australia, Canada and Mauritius is singled out for praise by different respondents. Several clients offer general praise for this aspect of the Apex service. “Friendly staff, always willing to try and accommodate our requests; good customer service,” says one. “I’m content with Apex’s quick response. I rely on them,” says another.

At an individual question level, the most improved score compared to 2016 is for the firm’s ability to support multiple prime broker relationships, up 0.45 points, to 6.36. Meanwhile, effectiveness of board reporting is up 0.38 points to 6.27. Only one question has recorded a lower score than last year, and even then this was by only 0.04 points. Timeliness and accuracy of reporting to investors now scores 6.03. This is an area where several clients see an opportunity for improvement. “Apex should look at upgrading to a new system which provides customised and industry standard reports,” notes one respondent. “I would like to see them provide an enhanced online web reporting platform with more flexibility for investor, auditor and manager reporting”, says another, while a third puts in a request for “more informative NAV statements for investors with additional data points”.

Clients did, however, note improvements in Apex’s ability to customise and/or allow self-customised reports to integrate into their own systems, with a 0.18 rise noted for this question. While Technology is the only service area to record an average score below 6.0, it remains, at 5.90, over 0.2 points above the market average and 0.19 points above its score for this category, in 2016.

In this year’s survey, Apex outperformed in every category.

You can download the PDF of the Apex survey report by clicking here or access the full survey via Global Custodian.