The advantages of outsourcing
Cost efficiency
Outsourcing custodianship and administration to a specialist can lead to significant cost savings. Fund Managers can mitigate the high costs associated with maintaining in-house teams and the technology required for efficient fund administration and custodianship. By leveraging the outsourced service provider’s knowledge and infrastructure, Fund Managers can reduce overhead costs and reallocate resources to core investment activities.
Knowledge and experience
By partnering with a proven leader in top-tier custodian services, a Fund Manager can gain access to a team of seasoned professionals with extensive knowledge and global experience. Their proficiency ensures strict compliance with everchanging regulatory requirements, and they handle the complexities of fund administration with precision. Fund managers can benefit from their outsourced partner's deep industry understanding, enabling them to focus on investment strategies and foster client relationships.
Scalability
As Fund Managers expand their portfolios, the demand for efficient administration and custodianship increases. Scalable solutions are available to adapt to the evolving needs of fund managers, whether managing a small fund or a large, diversified portfolio. The necessary infrastructure and support are provided to seamlessly accommodate growth.
Risk management
Outsourcing to a reputable provider enhances risk management. Robust security measures and stringent compliance standards are employed to safeguard assets and data. This mitigates the risk of errors, fraud, and regulatory breaches, providing Fund Managers with peace of mind and confidence in their operations.
Access to capabilities
Outsourcing can provide access to advanced capabilities and facilities that might not be accessible or affordable in-house. Service providers often invest in the latest technology, infrastructure, and training, which allows them to offer cutting-edge solutions and innovative services. By leveraging these advanced capabilities, Fund Managers can enhance their operational efficiency, adopt new technologies, and implement best practices without the need for significant capital investment.
Service level improvements
Outsourcing often leads to enhanced service levels, offering better quality and efficiency compared to in-house operations. External service providers are dedicated to delivering optimal performance, leveraging their knowledge, technology investments, and streamlined processes. This focused approach allows them to maintain higher service standards, meet stringent performance metrics, and adapt swiftly to evolving industry demands. By outsourcing, Fund Managers can benefit from improved service reliability, faster response times, and a heightened ability to scale operations effectively, all contributing to a more robust and competitive operational framework.
The disadvantages of outsourcing
Loss of control
One potential drawback of outsourcing is the perceived loss of control over critical functions. Fund Managers may feel that entrusting these responsibilities to an external provider limits their oversight and decision-making capabilities. However, with transparent communication and strong partnerships, this concern can be mitigated.
Dependency on service provider
Relying on a single service provider can create dependency, which may pose challenges if the provider experiences disruptions or changes in service quality. It is essential for fund managers to conduct thorough due diligence and choose a provider with a robust track record and contingency plans in place.
Integration challenges
Integrating an external service provider's systems and processes with existing operations can be complex. Fund Managers may face initial challenges in aligning workflows and ensuring seamless communication. However, these integration hurdles can be effectively addressed with a service provide who has the requisite skills and knowledge.
The advantages of outsourcing custodianship and administration far outweigh the potential drawbacks. Cost efficiency, knowledge, scalability, and enhanced risk management are compelling reasons for fund managers to consider this strategic move. While concerns about loss of control and dependency exist, they can be mitigated through diligent selection and transparent partnerships.
Apex Group Ltd., established in Bermuda in 2003, is a global financial services provider offering a single source solution across the whole investment lifecycle. In May 2023, Apex Group Ltd acquired Mainspring Fund Services Ltd and Mainspring Nominees Limited. Both entities are now known as Apex Ventures Fund Services Limited and Apex Unitas Limited, respectively. They are leading providers of fund administration and custody services for EIS, IHT, and alternative investment managers.
Through this acquisition, Apex Unitas’ existing clients now benefit from the efficiency of our single source solution, including access to a broad range of services such as capital raising and advisory services, fund services, super ManCo services, digital banking, depositary, custody, corporate services, and a pioneering ESG Ratings and Advisory solution. With over 13,000 employees globally, we provide services into 50 jurisdictions, delivering an expansive offering to asset managers, pension funds, allocators, financial institutions, private clients, and family offices.
As your trusted partner, we work as an extension of your team. We are uniquely positioned to meet the breadth of your requirements, delivering high-quality, client-centric, innovative, and tailored services.
Disclaimer: This document is not intended to constitute legal or regulatory advice. Any client wishing to enter a relationship with Apex Unitas Limited should take its own independent legal, regulatory and taxation advice. This material (and the information contained herein) is not intended to constitute a financial promotion and is not intended to be investment advice.
Apex Unitas Limited is authorised and regulated by the Financial Conduct Authority FRN 591814.
