Third-party fund services: how to choose the right provider?

By Robert Williams, Investor Relations & Sustainability Manager, Directorat at Threestones Capital Management (published in AGEFI October 2022)

In 2021 the number of investment funds registered in Luxembourg reached 14,445 according to an ALFI study, thus confirming investor confidence in the country as a hub for finance. The majority of funds use third-party suppliers to support their operations which has created huge demand for service providers in the market.

Service Providers that can offer the full range of management company functions are among the most popular covering Transfer Agent (TA) and Fund Accounting (FA) support, AIFM services, accompanying and assisting clients in setting up and managing their funds. However, what questions need to be evaluated to choose the right service provider for your needs, and who can be counted upon to deliver tailor-made services for your company.

Here is a short checklist of the most essential things to look at when choosing a service provider for your fund in Luxembourg:

  • How clear and easy is the onboarding process for your clients, will they be treated efficiently and with respect
  • Fair and transparent cost structure and invoicing – make sure you understand what you get for your money, to avoid hidden invoices down the line
  • Is the Team made up of flexible, well qualified, committed and multilingual people, what is the turnover rate
  • When there is an issue how long do they take to get back to you
  • What systems are being used to support the business
  • Do they have the strong knowledge and expertise to help you make the right decisions on product structuring (SIF, RAIF etc.)

You will be trusting the service provider to be the first point of contact to the clients investing in your fund and towards the regulator, both essential relationships for a healthy business.

Threestones Capital, an AIFM managing PERE funds, tried several providers before taking the decision to insource the central administration functions. They invested in an experienced cross-market team, industry-standard systems and used effective and reliable communications to manage their image with clients and regulators. The company’s proprietary Fund Admin system is Oracle-based, and it uses Domos for TA work and other industry-standard tools.

The improvements in service have been even better than expected. Now they have taken the decision to offer their services to other selected alternative investment vehicles. As a fund manager themselves they understand what is important for your clients. They have the expertise, a successfully tested model and will happily engage in solving everyday and long-term Manco problems. They strive for excellence in service.

The offer will be housed via a new company that is in the process of registration, providing a clear and focussed independent environment.