Eighty-five percent of limited partners (LPs) say poor fund administration has negatively impacted future allocation decisions. This isn’t a marginal concern, it’s a strategic inflection point. As LPs reassess how trust is earned, operational integrity is becoming as critical as performance. It’s no longer just about alpha, it’s about how efficiently and transparently a fund operates behind the scenes.
CSC’s 2025 Limited Partner’s Guide to Fund Operations captures this inflection point, drawing on responses from 150 LPs mainly in senior investment, risk, or operational roles across North America, Europe, the U.K., and Asia Pacific. The report reveals a market undergoing structural change where operational strength has become a precondition for long-term capital relationships.
Nearly 70% of LPs now prioritize operational transparency when evaluating fund managers. This reflects a deep recalibration of what fiduciary duty and risk management look like in practice.
Poor fund administration has consequences
These concerns are rooted in lived experience. From misallocated expenses and inconsistent reporting to delayed capital calls and compliance breaches, the risks are real.
In the past year alone, 80% of LPs have increased their operational due diligence, a marked jump that reflects growing caution amid macroeconomic uncertainty and regulatory tightening.
This isn’t just about ticking boxes. It is about protecting capital, anticipating reputational risk, and ensuring a smoother investor experience. LPs want to engage with fund managers whose operations are built for clarity, consistency, and control. To many potential investors, operational shortcomings aren’t just concerning, they’re dealbreakers. This sentiment is echoed throughout the data: Operational strength is now a direct proxy for investor trust.
Regulatory alignment is now a key factor in manager selection
Regulatory compliance is a major driver. With frameworks like AIFMD, SFDR, and MiFID II becoming more complex and globally intertwined, 66% of LPs now cite regulatory alignment as a key factor in manager selection. Within this increasing complexity, LPs expect general partners to demonstrate their ability to monitor and report seamlessly across multiple regulatory environments and jurisdictions.
The expectations extend beyond process into presentation. Reporting preferences are becoming more nuanced and regionally defined. In North America, 60% of LPs prefer standardized templates like those from the Institutional Limited Partners Association. In Asia Pacific, 42% of LPs prefer bespoke reporting tailored to their internal frameworks. Meanwhile, 37% of EMEA-based LPs now favor digital dashboards that offer real-time data visualization. This creates operational complexity for global GPs.
Technology as an enabler
Technology plays a significant role in providing tools to navigate multiple regulatory environments and jurisdictions through, among others, centralized data management, real-time compliance monitoring, and transparency. LPs increasingly expect fully integrated systems across fund accounting, investor relations, compliance, and reporting.
This can be compromised by lapses in cyber controls, which directly undermine trust. Therefore, cybersecurity has become an area of focus as data breaches are no longer seen as a risk confined to IT departments. A growing number of LPs now assess a fund manager’s cyber resilience as part of the operational due diligence process.
Third-party providers as a preferred option
This focus on operations is why the vast majority of LPs (92%) say they prefer fund administrators selected by GPs to be independent, third-party, and tech-enabled. Investors want an objective, capable partner managing core operational functions, not a black box run entirely in-house. Independent administrators provide essential oversight, enhanced risk controls, and scalable infrastructure. They also help ensure managers can meet the increasingly bespoke expectations of global LPs without compromising quality or security.
In the current environment, GPs cannot afford to treat fund operations as an afterthought. Administrative capability, compliance rigor, and reporting sophistication have become strategic assets. They are integral to a firm’s ability to raise and retain capital.
This evolution also presents an opportunity.
LPs are increasingly rewarding proactive managers who anticipate, rather than just meet, operational expectations. This means LPs must sharpen how they evaluate leadership in operational transformation. Whether through system audits, administrator reviews, or reporting stress tests, LPs have the opportunity to set new standards that define long-term partnerships.
The message is clear: Operational rigor is now inseparable from fiduciary duty. LPs who embed these expectations into their investment process will be better positioned to protect capital, ensure alignment, and drive stronger relationships.
By Marshall Saffer, managing director for funds and capital markets at fund administrator CSC
