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The Growth in Fund Services

Date: 11 October 2016

Fund services are growing, and they need qualified recruits

We are seeing marked growth in fund services, which is feeding into an increased demand for skilled professionals in this area. Growth is happening most rapidly in the middle office of buyside firms, such as asset managers and hedge funds.

What are fund services?

Fund service professionals take on routine tasks so the fund manager can concentrate on what they do best: making investment decisions. A fund administrator protects investor interests by giving an independent assessment of the value of assets within a fund, as well as the value of the fund as a whole.

The role of a fund administrator includes financial reporting and preparation of statements, audit liaison, net asset value (NAV) calculation, calculation of fund income and expenses, calculation of dividends and preparing shareholder reports, portfolio pricing and preparing and filing regulatory reports and other documents. If a fund comes to be liquidated and dissolved, fund administrators will also supervise this process.

Why there’s a strong need for middle-office product control

Five or ten years ago, pricing and risk were handled as different functions within a bank. This has changed; now valuation teams are growing in size and importance within banks. Processes around price verification have become more rigorous, whereas they used to be based on intrinsic value.

This increased focus on risk is influenced by the development of new financial regulations and greater oversight of the banking sector. The responsibilities of middle office are now greater than ever, which has led to recruitment drives and a strong appetite for well-qualified candidates in this area.

What are the key indicators of good fund services?

Fund services are growing because so many funds now require additional valuation services and internal product control. So what defines good fund services? One of the key elements is having a robust operational infrastructure and internal controls. As fund services manage risk, it is vital that processes are well-designed to ensure a thorough and comprehensive service.

Many fund services are turning towards automation and software that can help them become more scalable, so teams can be easily alter to accommodate fluctuations in demand. Qualified professionals able to carry out consultation, valuation and product control services are required to support this.

What are the skills required by this sector?

One of the most in-demand areas of knowledge sought by the fund services sector is derivative knowledge, specifically over the counter (OTC) derivatives. These products require a vigorous valuation process, which can only be carried out by professionals with experience in this niche. And if you have this experience, there’s never been a better time to make your next move.

Typically, posts require candidates with an advanced degree in an area such as physics or math. This demonstrates that candidates can carry out complex mathematical modeling. Roles also require knowledge of the regulatory framework.

Why not contact Selby Jennings to discuss how your career can develop in this direction?