Despite being a growing reservoir of funds under management, this critically important pool of capital is confronting mounting problems collating and disseminating key data in a timely manner.
The ratings house is pinning its growth strategy on a revamped methodology that increases the emphasis on governance to 25 per cent – a timely move considering APRA’s proposed reforms.
White outsourcing enters custody market for boutiques
(Pictured: Andrew Harrison)
White Outsourcing, the specialist funds manager administrator, has entered the custody market, concentrating on the small end – primarily boutique managers – which is a segment that has been increasingly eschewed by the big custodian banks. It has entered a new arrangement with JP Morgan to take on the global custody component on behalf of White’s clients.
White, which is a subsidiary of the listed Steadfast Group has already signed up four clients to the service and has had requests from six others since the new service was announced last week.
Andrew Harrison, White director, estimated that about 20 of the firm’s 70-odd clients were likely to avail themselves of White’s sub-custody capability, coupled with JP Morgan for global. The client base, which totals $35 billion in assets under administration, ranges from managers with $10 million under management to those with excess of $10 billion, both listed and unlisted.
Harrison said that with the support of Steadfast, White was able to meet all AFSL financial requirements for custodial providers, including the regulator’s prudential requirement of a $10 million security deposit in liquid assets.
White had previously had an arrangement where clients were referred to JP Morgan for both sub (domestic) and global custody. They would now be able to offer a seamless process for start-ups as well as larger managers.
Boutiques and hedge fund managers have long complained about the big custodians being inflexible in their fee structures, which meant that they tended to pay a lot more for custody pro-rata than larger managers. Custodians, in turn, have complained about the establishment costs associated with taking on a new fund manager, only to see it fail to live up to its growth expectations.
“JP Morgan are also very keen to move to this model,” Harrison said.
