{"id":239596,"date":"2022-07-12T18:57:43","date_gmt":"2022-07-12T22:57:43","guid":{"rendered":"https:\/\/qa.bluevaultpartners.com\/?p=239596"},"modified":"2022-07-12T18:57:43","modified_gmt":"2022-07-12T22:57:43","slug":"what-does-a-custodian-do-for-alternative-investment-managers","status":"publish","type":"post","link":"https:\/\/qa.bluevaultpartners.com\/what-does-a-custodian-do-for-alternative-investment-managers\/","title":{"rendered":"What does a custodian do for alternative investment managers?"},"content":{"rendered":"

What does a custodian do for alternative investment managers?<\/h1>\n

June 29, 2022 | Amy Small | UMB<\/a><\/p>\n

Legacy mutual fund managers are likely accustomed to hearing about custody requirements driven by regulation. But what does a custodian do for alternative asset managers who are not experienced in hiring a qualified custodian?<\/p>\n

The primary duty of a third-party custodian is loss prevention by safeguarding assets. All registered funds, even those with alternative strategies, are required by law to use a custodian, who \u201csit between\u201d the investment manager and the assets themselves, for everyone\u2019s protection.<\/p>\n

Many unregistered alternative funds\u2014such as hedge funds and limited partnerships\u2014also use a custodian, often at the request of one or more large investors who want the strong controls provided by third-party oversight such as compliance with anti-money laundering (AML) requirements. Or, because the ancillary services provided by a custodian support efficiency in their cash management and investor onboarding efforts.<\/p>\n

The word \u201ccustodian\u201d can be a bit confusing, especially in the context of alternative asset classes. The role I\u2019m addressing here is different from the services a manager\u2019s prime broker may provide. Private fund custody, in this case, refers to third-party oversight and processing services sometimes known as \u201cbank custody\u201d or \u201cinstitutional custody.\u201d<\/p>\n

That said, like prime brokers, private fund custodians can provide a suite of services that complement the primary function. For prime brokers, sales and trading is the primary function, complemented by ancillary services such as financing.<\/p>\n

For institutional custodians, risk reduction is the primary function, complemented by services such as:<\/p>\n

\u2022 Servicing and settling trades<\/p>\n

\u2022 Managing overnight cash<\/p>\n

\u2022 Providing real-time reporting on cash availability<\/p>\n

\u2022 Enabling straight-through processing on cash movements<\/p>\n

\u2022 Tax Reporting<\/p>\n

\u2022 Managing proxy and corporate actions<\/p>\n

\u2022 Handling foreign exchange (FX) needs<\/p>\n

\u2022 Segregating collateral<\/p>\n

\u2022 Registering and opening foreign accounts<\/p>\n

Not surprisingly, these private fund custody services relate to either or both securities themselves or the cash transacted for them. That intersection of securities and cash is precisely a custodian\u2019s domain\u2014and where it applies rigorous controls to avoid mistakes and fraud.<\/p>\n

Investor-related services\u00a0
\n<\/strong>
\nBut private fund custody services can extend even further to areas relating closely to the investor base of an alternative fund. These investor-related services can end up making a huge difference in managers\u2019 operational efficiency. One such area is online reporting, via an investor portal that allows investors self-service access to account information.<\/p>\n

Another investor-related area\u2014one which we\u2019ve seen significant interest\u2014is help completing alternative investment subscription documents on a manager\u2019s behalf. This can include completing the core offering documents as well as AML and know-your-customer (KYC) requirements for each investor.<\/p>\n

Financing arrangements and more
\n<\/strong>
\nAlthough prime brokers are more associated with financing than custodians, managers should know the role private fund custodians can play in supporting their financing strategy. At UMB, for example, we work strategically with both our customers and their existing lenders to create tri-party collateral agreements.<\/p>\n

Bank custodians like UMB may also be able to support alternative managers even further throughout the investment lifecycle with traditional banking and escrow services, investor servicing and fund administration.<\/p>\n

Ultimately, our work as custodian is to keep all parties secure and provide the client service that helps managers run their businesses as efficiently as possible.<\/p>\n

UMB\u2019s is among the nation\u2019s leading institutional custodians. Our team offers a complete range of domestic and global custody services with a high-touch service model. Visit\u00a0umb.com<\/a>\u00a0to learn how we \u00a0can support your firm\u2019s institutional custody needs, or\u00a0contact us to be connected with a custody team member.<\/em><\/p>\n

 <\/p>\n

<\/div>","protected":false},"excerpt":{"rendered":"

What does a custodian do for alternative investment managers? June 29, 2022 | Amy Small | UMB Legacy mutual fund managers are likely accustomed to hearing about custody requirements driven … <\/p>\n

Read more<\/a><\/p>\n","protected":false},"author":3464,"featured_media":226067,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"single-article.php","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[2742,2741,2734],"tags":[],"class_list":["post-239596","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-service-provider-news","category-service-providers","category-umb"],"acf":[],"yoast_head":"\nWhat does a custodian do for alternative investment managers? - Blue Vault<\/title>\n<meta name=\"description\" content=\"Legacy mutual fund managers are likely accustomed to hearing about custody requirements driven by regulation. But what does...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/qa.bluevaultpartners.com\/what-does-a-custodian-do-for-alternative-investment-managers\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What does a custodian do for alternative investment managers? - Blue Vault\" \/>\n<meta property=\"og:description\" content=\"Legacy mutual fund managers are likely accustomed to hearing about custody requirements driven by regulation. But what does...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/qa.bluevaultpartners.com\/what-does-a-custodian-do-for-alternative-investment-managers\/\" \/>\n<meta property=\"og:site_name\" content=\"Blue Vault\" \/>\n<meta property=\"article:published_time\" content=\"2022-07-12T22:57:43+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/qa.bluevaultpartners.com\/wp-content\/uploads\/2022\/03\/tech-AdobeStock_314816591-e1698341294867.png\" \/>\n\t<meta property=\"og:image:width\" content=\"600\" \/>\n\t<meta property=\"og:image:height\" content=\"319\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"becki.clifton@bluevaultpartners.com\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"becki.clifton@bluevaultpartners.com\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/qa.bluevaultpartners.com\/what-does-a-custodian-do-for-alternative-investment-managers\/\",\"url\":\"https:\/\/qa.bluevaultpartners.com\/what-does-a-custodian-do-for-alternative-investment-managers\/\",\"name\":\"What does a custodian do for alternative investment managers? - Blue Vault\",\"isPartOf\":{\"@id\":\"https:\/\/bluevaultpartners.com\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/qa.bluevaultpartners.com\/what-does-a-custodian-do-for-alternative-investment-managers\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/qa.bluevaultpartners.com\/what-does-a-custodian-do-for-alternative-investment-managers\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/qa.bluevaultpartners.com\/wp-content\/uploads\/2022\/03\/tech-AdobeStock_314816591-e1698341294867.png\",\"datePublished\":\"2022-07-12T22:57:43+00:00\",\"dateModified\":\"2022-07-12T22:57:43+00:00\",\"author\":{\"@id\":\"https:\/\/bluevaultpartners.com\/#\/schema\/person\/676e3314716f6c1292fd2cbce2d1206c\"},\"description\":\"Legacy mutual fund managers are likely accustomed to hearing about custody requirements driven by regulation. But what does...\",\"breadcrumb\":{\"@id\":\"https:\/\/qa.bluevaultpartners.com\/what-does-a-custodian-do-for-alternative-investment-managers\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/qa.bluevaultpartners.com\/what-does-a-custodian-do-for-alternative-investment-managers\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/qa.bluevaultpartners.com\/what-does-a-custodian-do-for-alternative-investment-managers\/#primaryimage\",\"url\":\"https:\/\/qa.bluevaultpartners.com\/wp-content\/uploads\/2022\/03\/tech-AdobeStock_314816591-e1698341294867.png\",\"contentUrl\":\"https:\/\/qa.bluevaultpartners.com\/wp-content\/uploads\/2022\/03\/tech-AdobeStock_314816591-e1698341294867.png\",\"width\":600,\"height\":319,\"caption\":\"leitbox remote management system (RMS) technology\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/qa.bluevaultpartners.com\/what-does-a-custodian-do-for-alternative-investment-managers\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/qa.bluevaultpartners.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"What does a custodian do for alternative investment managers?\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/bluevaultpartners.com\/#website\",\"url\":\"https:\/\/bluevaultpartners.com\/\",\"name\":\"Blue Vault Partners\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/bluevaultpartners.com\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/bluevaultpartners.com\/#\/schema\/person\/676e3314716f6c1292fd2cbce2d1206c\",\"name\":\"becki.clifton@bluevaultpartners.com\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/bluevaultpartners.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/f78f7e1d0eaf01db87dbca7e1393a9e8?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/f78f7e1d0eaf01db87dbca7e1393a9e8?s=96&d=mm&r=g\",\"caption\":\"becki.clifton@bluevaultpartners.com\"}}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"What does a custodian do for alternative investment managers? - Blue Vault","description":"Legacy mutual fund managers are likely accustomed to hearing about custody requirements driven by regulation. But what does...","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/qa.bluevaultpartners.com\/what-does-a-custodian-do-for-alternative-investment-managers\/","og_locale":"en_US","og_type":"article","og_title":"What does a custodian do for alternative investment managers? - Blue Vault","og_description":"Legacy mutual fund managers are likely accustomed to hearing about custody requirements driven by regulation. But what does...","og_url":"https:\/\/qa.bluevaultpartners.com\/what-does-a-custodian-do-for-alternative-investment-managers\/","og_site_name":"Blue Vault","article_published_time":"2022-07-12T22:57:43+00:00","og_image":[{"width":600,"height":319,"url":"https:\/\/qa.bluevaultpartners.com\/wp-content\/uploads\/2022\/03\/tech-AdobeStock_314816591-e1698341294867.png","type":"image\/png"}],"author":"becki.clifton@bluevaultpartners.com","twitter_card":"summary_large_image","twitter_misc":{"Written by":"becki.clifton@bluevaultpartners.com","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/qa.bluevaultpartners.com\/what-does-a-custodian-do-for-alternative-investment-managers\/","url":"https:\/\/qa.bluevaultpartners.com\/what-does-a-custodian-do-for-alternative-investment-managers\/","name":"What does a custodian do for alternative investment managers? - Blue Vault","isPartOf":{"@id":"https:\/\/bluevaultpartners.com\/#website"},"primaryImageOfPage":{"@id":"https:\/\/qa.bluevaultpartners.com\/what-does-a-custodian-do-for-alternative-investment-managers\/#primaryimage"},"image":{"@id":"https:\/\/qa.bluevaultpartners.com\/what-does-a-custodian-do-for-alternative-investment-managers\/#primaryimage"},"thumbnailUrl":"https:\/\/qa.bluevaultpartners.com\/wp-content\/uploads\/2022\/03\/tech-AdobeStock_314816591-e1698341294867.png","datePublished":"2022-07-12T22:57:43+00:00","dateModified":"2022-07-12T22:57:43+00:00","author":{"@id":"https:\/\/bluevaultpartners.com\/#\/schema\/person\/676e3314716f6c1292fd2cbce2d1206c"},"description":"Legacy mutual fund managers are likely accustomed to hearing about custody requirements driven by regulation. But what does...","breadcrumb":{"@id":"https:\/\/qa.bluevaultpartners.com\/what-does-a-custodian-do-for-alternative-investment-managers\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/qa.bluevaultpartners.com\/what-does-a-custodian-do-for-alternative-investment-managers\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/qa.bluevaultpartners.com\/what-does-a-custodian-do-for-alternative-investment-managers\/#primaryimage","url":"https:\/\/qa.bluevaultpartners.com\/wp-content\/uploads\/2022\/03\/tech-AdobeStock_314816591-e1698341294867.png","contentUrl":"https:\/\/qa.bluevaultpartners.com\/wp-content\/uploads\/2022\/03\/tech-AdobeStock_314816591-e1698341294867.png","width":600,"height":319,"caption":"leitbox remote management system (RMS) technology"},{"@type":"BreadcrumbList","@id":"https:\/\/qa.bluevaultpartners.com\/what-does-a-custodian-do-for-alternative-investment-managers\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/qa.bluevaultpartners.com\/"},{"@type":"ListItem","position":2,"name":"What does a custodian do for alternative investment managers?"}]},{"@type":"WebSite","@id":"https:\/\/bluevaultpartners.com\/#website","url":"https:\/\/bluevaultpartners.com\/","name":"Blue Vault Partners","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/bluevaultpartners.com\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/bluevaultpartners.com\/#\/schema\/person\/676e3314716f6c1292fd2cbce2d1206c","name":"becki.clifton@bluevaultpartners.com","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/bluevaultpartners.com\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/f78f7e1d0eaf01db87dbca7e1393a9e8?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/f78f7e1d0eaf01db87dbca7e1393a9e8?s=96&d=mm&r=g","caption":"becki.clifton@bluevaultpartners.com"}}]}},"_links":{"self":[{"href":"https:\/\/qa.bluevaultpartners.com\/wp-json\/wp\/v2\/posts\/239596"}],"collection":[{"href":"https:\/\/qa.bluevaultpartners.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/qa.bluevaultpartners.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/qa.bluevaultpartners.com\/wp-json\/wp\/v2\/users\/3464"}],"replies":[{"embeddable":true,"href":"https:\/\/qa.bluevaultpartners.com\/wp-json\/wp\/v2\/comments?post=239596"}],"version-history":[{"count":3,"href":"https:\/\/qa.bluevaultpartners.com\/wp-json\/wp\/v2\/posts\/239596\/revisions"}],"predecessor-version":[{"id":239599,"href":"https:\/\/qa.bluevaultpartners.com\/wp-json\/wp\/v2\/posts\/239596\/revisions\/239599"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/qa.bluevaultpartners.com\/wp-json\/wp\/v2\/media\/226067"}],"wp:attachment":[{"href":"https:\/\/qa.bluevaultpartners.com\/wp-json\/wp\/v2\/media?parent=239596"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/qa.bluevaultpartners.com\/wp-json\/wp\/v2\/categories?post=239596"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/qa.bluevaultpartners.com\/wp-json\/wp\/v2\/tags?post=239596"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}