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What is a Fund Administration?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 18 September 2016
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Also known as fund management, "fund administration" is a term that is used to describe the various activities associated with managing the assets contained in some type of collective investment scheme. The fund in question may be some type of mutual fund, a hedge fund, pension fund or even a unit trust. Depending on the size and complexity of the fund, a single administrator or manager may oversee and perform all these activities, or be assisted by a staff.

The exact scope of responsibilities that go into fund administration will vary, based on the particulars of how the fund is organized, the underlying purpose for the fund, and the provisions that the administrator must abide by in the day to day management process. A common thread in most examples of fund management has to do with making sure that the assets purchased and held by the fund are producing returns that are within acceptable ranges. At the same time, the administrator is responsible for making sure that disbursements from the fund are made in accordance with applicable laws and the founding documents that established the collective investment scheme.

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Much of the process of fund administration has to do with performing specific tasks on a daily, weekly, or monthly basis. For example, the fund’s accounting records are typically reconciled with daily reports on the fund’s holdings, along with a monthly reconciliation with the broker statement that is issued every thirty days. As part of this reconciliation, the administration process involves settling any trades conducted during the business day, and also documenting any dividends or interests that are received. Calculation and scheduling payment of dividends or interest payments to fund investors may be done on a weekly, bi-weekly, or monthly basis.

Fund administration also involves preparing end of year documents that provide an accurate assessment of both income and expenses associated with the fund from the beginning to the end of the period. Many funds are structured to require these reports to be completed by a given date, and made available to both fund members and to the appropriate tax agencies. Once the annual year-end reports are completed, fund managers will oversee the preparation of tax return forms for local, state and federal agencies.

In the event that a fund must be dissolved for some reason, the process of fund administration will involve closing the accounting records, settling any debts owed by the fund, and paying final disbursements to fund investors. This process must be completed in accordance with the laws and regulations put in place by government agencies that oversee investment transactions in the nation where the fund is established. Depending on local laws and the structure of the fund, the process may take only a matter of weeks, or require a year or more to complete the dissolution.

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