Fund Administration 101

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May 17, 2022

Written by:

Emma Summers

As a fund manager, you may or may not be familiar with fund administration. Historically, all back-office functions of a fund have been in-house, however, hiring an outsourced provider to take on these responsibilities has become a more efficient way to run a fund.


A fund administrator is a third-party provider that is hired to perform the functions of your back office. Fund administration is the process of managing a fund’s assets. The major components of fund administration include:

  • Accounting and bookkeeping
  • Tracking investments and reporting
  • Audit and tax process management
  • LP communications

Some fund admins also offer support for a fund’s management company entity, which includes running payroll, expense and bill pay, and day-to-day accounting. Fund admins may also offer software, which can range from an LP portal for investors to obtain information to dashboards with insights into fund metrics and the portfolio for general partners.

Running a fund is extremely time-consuming. Outsourcing some of the work to fund administrators can greatly alleviate stress and give fund managers more time to focus on investing and generating returns for investors.

When it comes to starting a fund and deciding how to run your back office, you don’t want to put all your eggs in one basket from the start. Your investment goals are most likely varied and nuanced, just as your prospective service providers will be. A fund administrator plays an important role in the success of your organization. There are numerous benefits to both the fund manager and the investors when outsourcing fund administration, such as leveraging a team of experts, streamlining operations, and access to technology and developed processes and procedures. (Read our blog, Benefits to Hiring a Fund Administrator, to learn more.)

Fund administration is typically provided throughout the year, and can be broken out into three different stages of support:

  1. Quarterly services
  2. Annual services
  3. Intra-period services

Quarterly services often include preparing financials for investors and partners, preparing and disseminating capital account statements, and calculating performance metrics, such as IRR, TVPI, DPI, and MOIC. Annually, a good fund administrator will also manage the tax and audit process with your third-party providers. During the intra-period, fund admins will be facilitating items like capital calls, distributions, and investments, managing investor queries, and maintaining the investor portal. Your admin should have a good grasp on accounting and fund operation best practices in the industry and be able to help navigate you through running your fund.


Once you narrow down your selection of admins, timing is an important piece to consider. When is the right time to engage an admin? The earlier the better, however, at least a month before your first close is ideal. This will give your admin time to get systems set up and your LP information onboarded and ready to call capital. Starting the conversation with different admin providers earlier on in your fundraising process will give you enough time to scope out your needs and select the right fit for your fund and investors. Engaging earlier on in the fundraising process can also help with due diligence, especially for your potential institutional investors who may require that you have an admin in place before making a commitment. At Vector AIS, we don’t start billing until the date of your first capital call, so we can engage as early as desired to help with things such as review of the draft LPA and subscription docs and providing recommendations/introductions to the industry-leading service providers.


After you sign your contract and you are ready to either close or begin onboarding, fund administration services really ramp up. Typically, the first thing a fund admin will do for a new fund is onboard all investor information from the subscription docs, such as commitments amounts, bank wiring instructions, and investor identity information. Once all this information is recorded, the fund administrator will initiate the first capital call. For funds with history, the first month or so will be inputting your historical data into their system to be able to handle the books moving forward. This is the time you’ll get to meet the team you’ll be working with and walk-through processes and workflows. It is a best practice to set up a recurring meeting on a cadence that works for you and the fund admin team, to discuss upcoming capital calls, investments, or distributions, so the team has ample time to prepare.

Hiring a fund administrator can be extremely beneficial to running your fund and create a lot of efficiencies for your back office. Not only do they facilitate or manage most of the fund operations which saves you time and resources, but they can also offer insights into industry best practices and make connections to trusted service providers in other areas such as legal, tax, audit, and banking.

To find out whether Vector AIS is the right fund administrator for you and your fund, reach out to to learn more.


Vector AIS is a next-generation fund administrator and technology company for closed-end investment funds. At Vector, we strive to create an inspiring, inclusive, equitable workplace that celebrates and values employees. As we continue to scale, we do so with a responsibility to foster a culture of inclusivity and balance that allows teammates to thrive at work and in their personal lives.

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