A firm and its funds are serviced by several external service providers. These services providers include custodians, administrators and broker-dealers who are an important arm in the operations of funds and assist in the valuation of assets, securities lending, advice on regulations and fund terms, and fundraising and investor subscription processes.
Market Intelligence for Fund Managers
Given the importance of these operations, the selection process of service providers is one of the first steps when setting up a new fund. Fund managers carry out due diligence and evaluate the efficiency of these service providers by analysing market share, performance, affiliations and GAV managed by these institutions.
Fund managers can also leverage data of other funds to access the workings of service providers by analysing the number of sudden termination of contracts, the reason for these terminations and the growth of funds with these service providers. The major reasons for these terminations were cost, investor concerns, fund manager’s dissatisfaction and low growth in AUM. Such data can aid new fund managers due diligence process.
Market Intelligence for Investors
Investors of the funds may also be interested in tracking the service providers of the various funds they are interested in. One can make informed assumptions about the future performance and growth of a fund by looking at the institutions that are affiliated with the fund.
Understanding the service providers disclosure filings
The SEC requires firms to file several filings throughout the year, these filings are rarely available for users to consume and therefore the analysis of services providers becomes a tedious task. The two prominent filings that record the external affiliations of a firm are Form ADV and Form N-CEN.
Form N-CEN provides detailed records on the commission charged, number of funds serviced and the total AUM with each service provider of the firm and its funds.
On the other hand, Form ADV covers the relationship of the firms with their service providers, the termination/commencement date of service providers contract, if there has been a sudden termination of the relationship between the entities, the growth in AUM with the service provider etc.
The RADiENT platform aggregates data from Form ADV and Form NCEN to provide users with easy to access, user-friendly data compiling all major categories needed for analysis.
A complete and consolidated list of the market share of these service providers can be accessed on the Advisers tab based on the category of the service provider the user is interested in viewing.
RADiENT data shows that from the market share of the top 20 administrators, the top 3 entities hold nearly 50% of all the market share, with SS&C tech holding 25.12% 9 ( with a total GAV of $3.3T). When compared to the top 10 administrators SS&C Tech holds 29.5% of the total market share, followed by the Citco Group with 18% and State Street with 19%.
Custodian data shows that JP Morgan is the market leader with a total GAV of $9T ( servicing 8651 funds) followed by Bank of America Corporation with $7.7T (8037 funds). The top 5 custodians hold a total GAV of $35.4T which is 61.2% of the total Gav held by the top 10 custodians in the US.
Of the 165 registered prime brokers, The Goldman Sachs Group services 1169 firms and a total of 2891 funds with a total GAV of $5.2T. The market leader by share of total GAV managed is Barclays Bank with $5.7T across 709 funds in 209 firms.
Via RADiENT one can easily filter for funds/ firms via service provider categories. For example, you can look which all firms and funds PWC audits. RADiENT data shows that PWC is the auditor for Apollo Capital Management, Edelweiss Alternative Asset Advisors PTE limited etc.
You may further track the funds of the firm you are interested in and the fund’s service provider details, cross-referenced with Form NCEN on RADiENT!
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