One of the leading international providers of services to hedge funds and other alternative investments, UBS is perhaps better known as the largest wealth manager in the Asia-Pacific region and glo
One of the leading international providers of services to hedge funds and other alternative investments, UBS is perhaps better known as the largest wealth manager in the Asia-Pacific region and globally. Now the customer relationship expertise, central to the group’s private banking business serving high net worth clients around the globe, is being brought to bear in developing UBS Global Asset Management’s Fund Services business in Asia-Pacific.
Fund Services provides administration and other services including accounting, net asset value calculation, shareholder services, banking and credit facilities to hedge funds via centres in the Cayman Islands, Dublin and Toronto (and soon Krakow, Poland). At the end of last year, the business was responsible for USD214bn in alternative assets worldwide, up from USD30bn five years ago, and out of a total of USD580bn in fund assets under administration.
The growth of the Fund Services business strongly correlates to that of the hedge fund industry in Asia, where assets under management have grown from USD5bn in 1996 to an estimated USD170bn today, with growth of 30 per cent per annum over the past five years. Some analysts forecast that Asia, which currently has around 1,200 funds, will have close to USD1trn in assets in five years’ time.
Until recently, UBS did not provide administration services directly to its Asian hedge fund clients from within the region, but last year the group established a fund services business development and client relationship office in Hong Kong, to serve traditional and alternative fund services clients in Asia Pacific from within the same time zone.
The move came not only in response to the burgeoning interest in the Asian hedge fund market, but also because the increasing complexity and sophistication of the strategies and structures employed by the hedge fund industry require an increasingly close partnership between service providers and their clients.
The Fund Services business is required to cope with increasingly complex structures and esoteric investment approaches and to accommodate an ever-growing number of investment positions and transactions. At the same time, hedge funds in Asia are required to satisfy stringent regulations especially in critical areas such as anti-money laundering and know-your-customer requirements. As a result both of the increased regulatory demands as well as the need to demonstrate operational efficiency, more and more fund managers are seeking external assistance.
To some degree, the pressures can be relieved through deployment of state-of-the-art technology, but they also call for greater interaction between administrators and hedge fund managers. In turn, this requires employees of the highest calibre, in a highly competitive environment where attracting and retaining key employees and developing the skills required by the marketplace require a full-time focus.
The experience of the client relationship team in Hong Kong, with its specialist knowledge of regional markets and languages, is critical to providing clients with the service they need to run their business successfully. Given the cross-business co-operation throughout UBS, having a team on the ground in Hong Kong will enhance the level of service available to clients across the bank, providing opportunities to cross-sell and to expand the range of services.
André Valente is global head of business development and client relationships and Michelle Chua is head of business development and client relationships in Asia-Pacific at UBS Global Asset Management – Fund Services
By André Valente and Michelle Chua