There is a distinct difference between a hedge fund manager and a hedge fund administrator. Although both roles provide important services, they perform very different tasks.
Hedge Fund Manager
A hedge fund manager decides where to invest the client's money. The manager analyzes investments, allocates capital between investments and tracks the investments to ensure that they continue to meet the hedge fund's criteria. The manager also meets with clients and works to bring in new clientele.
Hedge Fund Administrator
The hedge fund administrator is responsible for the accounting of the investments and reporting results to the clients. The administrator prepares the monthly or quarterly statements that are sent to the client that show the client's holdings, gains, losses and balances. The administrator also answers client questions relating to these items.
Relationship Between the Manager and the Administrator
The hedge fund administrator can be part of the manager's company or a subsidiary. The administrator can also be a third-party company and not affiliated with the hedge fund. Many hedge funds outsource administrative responsibilities to a third-party company.
Benefits of a Third-Party Administrator
A third-party administrator provides benefits to both the manager and the client. The manager is able to focus on the investments and recruiting new clients while the administrative duties are handled by the third-party administrator. The client is assured that all of the accounting of the hedge fund is handled properly by an independent administrator.
It is the client's responsibility to review the statements that the administrator provides. If there are any errors, then the client should speak with the administrator. If the client has questions about the hedge fund's strategy or investments, the client should speak with the hedge fund manager.