The Changing World of Hedge Funds: Implications for Fund Administrators

TowerGroup Take-Aways

Report Coverage

Vision

The Role of the Hedge Fund Administrator

Exhibit 1: Top 15 Global Hedge Fund Administrators by Assets Under Management (2005)

Drivers and Challenges for the Fund Administration Market

Hyperacquisition

Exhibit 2: Acquisition and Consolidation in the Fund Administration Market (2002-05)

Managing Growth and Capacity

Valuing Hard-to-Price Instruments

Exhibit 3: Portfolio Valuation: Valuing Hard-to-Price Securities (2005)

Increased Frequency of NAV Calculations

Exhibit 4: Portfolio Valuation: Frequency and Independence (2005)

Competition from Prime Brokers

Spending on Fund Administration and Technology

VENDOR MARKETPLACE

Key Technology by Function

Exhibit 5: Primary Vendors to the Hedge Fund Administration Market Grouped by Function (2005)

Portfolio Accounting

Advent Software: Geneva

Global Investment Systems: MFACT

SunGard: INVEST ONE

Others

Partnership/Investor Accounting

Advent Software: Advent Partner

Fi-Tek: HedgeTek

SunGard: InvesTier

Others

Shareholder Accounting (Transfer Agency)

Koger: NTAS

Global Investment Systems: MSHARE

Other Applications

CorrectNet: InfiPOINT

Netik: InterView

J.P. Morgan FCS: Wall Street Office

SunGard: Reech FastVal

Summary