We offer a comprehensive range of services to both investment funds and their managers, that’s why we refer to Exocap as a ‘funds services’ firm, and not just as a ‘fund administrator’.

When it comes to fund administration, i.e. the services outsourced to us by funds and managers in relation to the ongoing administration needs of an investment vehicle, our approach is based on a core/satellite model.

The core of our fund administration services is fund accounting (1), surrounded by a number of ‘satellite’ services (2).

1. Core: fund accounting

Fund accounting means the methods of accounting used by investment funds.  It’s sometimes called ‘investment accounting’ or ‘investment fund accounting’.  To be more specific, one could use terms such as ‘mutual fund accounting’, ‘hedge fund accounting’ and ‘venture capital or private equity fund accounting’.

a. Fund accounting basics

Some aspects of the role of a fund accountant are similar to the role of a regular corporate accountant.  As such a fund accountant will:

• recognise income and expenses on an accrual basis
• check accounting records against external sources (e.g. market price or data)

But there are many elements of investment fund operations that are clearly different to those of a traditional corporation:

Open-ended investment funds, such as mutual funds and hedge funds, can involve:

• regular and frequent cash inflows and outflows from and to fund investors
• a portfolio of financial investments that are typically measured at fair value
• a net asset valuation, or NAV calculation, completed daily, weekly or monthly

Closed-ended funds, such as venture capital and private equity funds present other distinctive features:

• accounting for capital commitments is crucial as investors make commitments to contribute capital over time, which must be tracked and called upon when needed
• long-term investment, often in illiquid assets that are not frequently valued, requiring specialised valuation techniques and periodic fair value assessments
• accounting for income in closed-ended funds may involve recognizing income over the life of the investment, particularly for those that invest in debt instruments or real estate with rental income

Master/feeder and umbrella funds structures also have their own specific accounting technicalities.

b. What does a fund accountant do?

The fund accountant’s role involves capturing and recording a fund’s activity and calculating its NAV.

Our fund accountants’ job description might outline the following responsibilities:

• Net Asset Value (NAV) calculation: i.e. determining the value of a fund’s assets minus its liabilities
• account for capital activity (subscriptions and redemptions)
• calculate and/or monitor expense accruals
• process expense payments
• account for fund income
• process and/or monitor corporate actions
• price financial instruments
• reconcile cash and portfolio positions to custody/broker records
• prepare investor and regulatory reporting

2. Satellites: other fund administration services

Apart from fund accounting, Exocap renders the following services:

• financial reporting: preparing financial statements, investor reports, and other regulatory filings
• audit assistance: facilitating the audit process by providing necessary documentation and support
• investor services: handling subscriptions, capital calls, redemptions, transfers, and investor inquiries
• compliance monitoring: ensuring the fund adheres to legal and regulatory requirements, including in respect of investors onboarding
• tax services: assisting with tax reporting, FATCA/CRS, withholding, and distribution calculations
• trade processing: executing and settling trades on behalf of the fund
• cash management: overseeing the fund’s cash flow, including payments and receipts
• risk management: identifying and mitigating financial risks associated with the fund’s operations
• performance measurement: tracking and reporting on the fund’s performance metrics