Since 2007, Barrington Partners has been conducting its bi-annual Fund Accounting and Administration Cost Survey (‘Survey’), which encompasses the following six functional activities: NAV/Daily Accounting, Fund Administration, Tax Administration, Legal Administration, NAV Oversight, and Pricing/Data Feeds.
The goal of this survey is to answer the following question: “Are overall fund accounting and administration costs for the fund company within a reasonable range of what other fund companies are paying when considering the complexity of the funds’ portfolios?”
In developing a durable response, we identify the various factors that contribute to cost structure. To do so, we examine more than 30 variables and 500 combinations of datasets to create the requisite complexity models that allow us to compute complexity units for each fund.
Fund companies and boards can better understand and compare their predicted costs to their actual costs for fund accounting and administration functions …
Participants in the 2015 edition of the survey comprised more than 65 fund companies with $6.52 trillion in unique AUM (more than 50% of all US long-term mutual fund AUM), providing a robust dataset for our analysis.
This survey uses regression analysis to systematically evaluate the relationship between cost and complexity of each fund accounting or administration activity. This approach allows us to compare dissimilar funds on a common and relative basis and to predict costs within a reasonable range for each function and overall.
… and compare their results with others in the industry.
- Fund managers can pinpoint potential opportunities for cost savings (or explain anomalous costs) in particular funds or at the complex level.
- Our methodology means that fund companies can compare themselves with others that have the same servicing model (e.g., internal, hybrid, outsourced for a particular function or overall), similar number of funds, or overall complexity.
- Firms are able to contrast their staffing models for each function, even those that are outsourced.
The next edition of the Fund Accounting and Administration Cost Survey will commence in 2017.