In recent years, the landscape of private wealth distribution has seen remarkable changes. Traditionally, the arena was dominated by asset managers who focused on mutual funds dealing with conventional assets like stocks and bonds. But today, things look a bit different. Private market managers, who were once devoted solely to raising capital for drawdown funds through institutions, family offices, and ultra-high net worth individuals, are now exploring the private wealth sector, creating fresh channels for capital raising.
Understanding the delicate mechanics of creating and distributing evergreen products within a private wealth strategy is crucial for a fund’s success and the manager’s reputation. In this discussion, we’ll delve into the vital operational elements managers should contemplate before they launch an evergreen private wealth fund. We’ll also showcase how SS&C’s solutions can meet these needs and highlight SS&C’s unique position in this fast-changing market.
The Key Challenge: Managing Evergreen Funds
The appetite for alternative investment products is on the rise among financial intermediaries. But with this growing interest comes a slew of operational challenges. While traditional mutual funds, interval funds, and tender offer funds operate under the Investment Company Act of 1940, allowing them to trade smoothly via the NSCC Fund/Serv platform, evergreen products like Business Development Companies (BDCs), Real Estate Investment Trusts (REITs), and 3c7 funds don’t enjoy this standardization. These non-’40 Act products often require more intricate manual processes since their back-office operations lack standardization, necessitating custom workflows and manual management to handle trades effectively.
Apart from interval funds, evergreen products are dispensed daily by financial advisors. They have specific trade or NAV dates about monthly or quarterly when new subscriptions pour in. Quarterly, these funds may open up buybacks for investors, respecting limits set in the fund’s Prospectus or Private Placement Memorandum (PPM). As private market managers broaden their offerings beyond conventional norms to introduce them to private wealth clients, navigating these operational nuances while ensuring regulatory compliance becomes ever more essential.
SS&C’s Fund Administration + Transfer Agency Solution
SS&C offers a tailored fund administration and transfer agency solution to assist managers eager to launch evergreen private wealth products.
Transfer Agency (TA):
SS&C’s Transfer Agency service is intricately connected with the financial intermediary network, addressing the unique hurdles stemming from non-standardized back-office operations in alternative investments. Since each broker-dealer and Registered Investment Advisor (RIA) relies on varying systems and methods, SS&C establishes custom "pipes" that ensure data flows seamlessly across every step of a fund’s lifecycle. This integration allows for efficient information exchange, from trade confirmations and compliance tracking to NAV calculations and investor reporting, thus streamlining operations, minimizing manual intervention, and ensuring precise management of evergreen investment products.
Fund Accounting & Administration (FA&A):
Within private market assets, SS&C offers the industry’s most comprehensive platform, managing over $2.5 trillion across private equity, credit, infrastructure, and real estate. They provide extensive services tailored to the distinctive requirements of both evergreen and private-placement funds, offering robust support in operations, compliance, risk management, and reporting. This positions SS&C as a reliable ally for asset managers seeking efficiency and dependability in private markets fund accounting and administration.
Differentiation & Competitive Advantage
SS&C’s competitive edge lies in bundling two essential services: Transfer Agency and Fund Administration & Accounting. The synergy of TA services combined with Fund Administration & Accounting is key to seamlessly managing evergreen fund operations. When bundled, these services facilitate smooth communication and data flow in back-office operations, reducing manual errors and preventing ambiguities between investor records and fund data. SS&C’s unified technology promises consistency and precision throughout the investment lifecycle.
SS&C leverages its extensive experience in private markets and its integrated tech infrastructure to equip clients effectively for the operational demands of this burgeoning market segment.
Conclusion
As private wealth distribution gains traction through the adoption of evergreen alternative investments, asset managers require partners capable of adeptly navigating the operational complexities involved. SS&C’s solutions—spanning transfer agency, fund administration, and accounting—are crafted to simplify these challenges, enabling clients to dedicate their energies to what matters most: providing value to their investors.
With robust infrastructure, proper tools, and expertise at their disposal, asset managers can flourish in the swiftly advancing private wealth arena. SS&C is ready to support them every step of the way. Reach out to us to discover more.
