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Asian funds seek to ease outsourcing challenges

3 May 2022

Ronald Tan

Head of Fund Services, Intertrust Singapore

Ronald Tan

Head of Fund Services, Intertrust Singapore

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Fund managers in Asia are re-calibrating the balance between in-house and outsourced work

In Asia, the pressure on fund managers is rising as a result of increased scrutiny from regulators along with more detailed investor reporting requirements. This has led many to reconsider the balance between increasing the scope of outsourcing and increasing in-house staff.

This is a natural step for funds in the region. When they first start operations, fund managers in Asia tend to look for outsourcing partners to fill in gaps in the back / middle office. Some rely entirely on third parties for fund administration and back / middle office functions.

While a European or US fund manager might be wary of replacing an entirely in-house operations team, many Asian counterparts never had one in the first place given the bevy of first time managers in Asia.

Outsourcing fund administration in Asia

Asian funds are ambitious and want to grow quickly. The post-pandemic economy may give them the opportunity to do so.

Singapore is already seeing a significant increase in inbound business travel as travel lanes are reopening and many economies are reawakening.

For fund managers in Asia, growing pressure on back-office operations can hamstring growth.

Investors the world over want more frequent and more in-depth reporting, and this is more of a concern in Asia given the lower starting base.

Tech-savvy Asian investors are also starting to request for instant access to their data; preferably via 24/7 self help portals.

Investors are asking this of fund managers, who in turn are asking it of outsourced service providers. When funds talk to service providers, ease of access to their systems and data is a key concern. They demand automation that ensures data is always accurate and up to date.

The technology infrastructure required to offer this kind of access is always not something Asian fund managers are keen to invest in. This is due to the significant costs required to set up the digital infrastructure which has to be sourced by the fund manager themselves.

Fund managers also know that technology is never a one-off investment either. It needs to be managed, maintained and updated. To make the most of it, they know they’ll need to invest in expertise and training, too.

The increasing demand for more advanced technology is one factor that is driving conversations about the balance between outsourcing and in-house resources in Asia. But it isn’t the only one.

Getting the balance right between outsourcing and in house

Despite this, funds can be reluctant to outsource certain functions. Many are happy to pass over responsibility for generic data collection, validation and reporting services, but want to retain more bespoke operations in house.

Most will want to retain control of all technical details around investments and any information that requires their expert analysis.

But what if third parties could mould their services to the specific needs of the fund?

What if under-pressure fund managers could find an outsourced team that would think on their behalf and offer proactive advice?

Most of all, they want partners that can scale as they do. Fund managers don’t want to have to search for new service providers when their assets under management double or triple.

On top of it all sits the question of cost. Many Asian fund managers are happy to avoid the HR challenges that come from managing large in-house teams, but they won’t pay over the odds for an outsourcing partner if they can’t see the value.

It’s a balance and it’s up to service providers to show that the services they provide will create better, more responsive and more investor-focused funds – and ultimately pay for themselves.

Why Intertrust Group?

  • As a strategic partner, we offer a full-spectrum service tailored to meet all back-office needs throughout the lifecycle of a private capital fund. This against a background of ever-increasing reporting demands.
  • Our proprietary innovative technologies are combined with global knowledge and experience to deliver added-value services catering for all asset classes, while increasing manager visibility of portfolios on behalf of a fund’s investors.
  • Our expert teams harness tools and cutting-edge technologies to eliminate costly errors in the handling of fund administration and corporate actions, investor relations and portfolio management.

Intertrust Group is a publicly listed company with 70 years’ experience in providing world-class trust and corporate services to clients around the world.

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