What can a manager do to keep its administration fees down?
Keep it simple. The more complex the offering, the harder managers will find it to locate cost-effective administration support. Managers should expect administration fees to increase if any of the following items are present:
- The fund has more than one prime broker
- The investment strategy uses high frequency trading
- The fund holds hard-to-value securities such as thinly traded securities, private placements or certain derivative instruments
- The fund trades in multiple currencies
- The fund creates a “side pocket” for certain investments
- The fund has a complex and unusual fee structure
In addition to administrators, attorneys and other service providers – especially auditors and tax preparers – typically charge higher fees for more complex fund structures.
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