Half of hedge funds changed service provider, according to Preqin

20 Mar, 2014

Almost half of hedge funds have changed a service provider since inception, according to a survey of 100 managers by Preqin.

Prime brokers and fund administrators were the most frequently switched provider, added the report. Dissatisfaction with the level of service unsurprisingly was the most prominent reason among managers for changing providers.

Three quarters of all Asia-based managers and those in the Rest of the World (ROW) have swapped fund administrators over the last five years compared to 56% of European firms and 52% of North American hedge funds.

“Dissatisfaction with the quality of the service they receive is a common concern across all fund managers, and is a particular problem in emerging regions for hedge fund management, as the service provider sector may be less developed or has little local presence,” said Amy Bensted, head  of hedge fund products at Preqin in London.

However, North American (61%) and European (48%) managers were more likely to change prime broker than Asia-Pacific hedge funds (25%).

SS&C GlobeOp was selected by the largest number of launch funds in 2013 for its administration services, followed by Morgan Stanley Fund Services, Citco and State Street, according to the Preqin study.

Morgan Stanley and Goldman Sachs were the most popular prime brokers for launch funds last year, with each accounting for 19% of the market share. They were followed by J.P. Morgan (14%), Credit Suisse (13%) and UBS (8%).