Managers increase emphasis on independent services
Depositary assets at INDOS Financial have grown past $25bn only three months since the service provider passed the $20bn milestone on 1st February.
According to Bill Prew, CEO of INDOS Financial, this continuing, rapid rate of growth is partially a function of INDOS’ competitive and tailored fee structure where, in contrast to the fixed rates charged by many providers of depositary services, rates decline as managers’ assets grow.
“More generally,” said Mr Prew, “our message about the virtues of independence is getting through. INDOS firmly believes that depositary services are more effective and will add value when handled by an independent provider rather than bundled with fund administration and managers across the alternative investment space appear increasingly to agree.”
Underscoring this assertion, Mr Prew pointed out that while the majority of INDOS’ depositary assets arise from new/developing investment funds, over 45%, representing over $11bn (17 funds), have transferred from other service providers in the last three years.
“It would be wrong to infer that INDOS is carrying all before it given that we’re a $25bn participant in a $1 trillion+ European alternatives industry and furthermore, some clients have transferred from administrators who have chosen to withdraw from the depositary space.
“Nonetheless,” Mr Prew continued, “the importance to managers of regular engagement with their depositary service provider cannot be overstated given that one of the key roles of a depositary is to oversee the output of the administrative function and flag up issues. Many managers who transfer business to us say that formerly, extant problems went either unidentified or unreported and therefore recognise the value our independent service provides”.