Administration sits between the manager, the custodian and the investors. The manager trades; the custodian holds; the administrator records, values and reports. Regulators in most domiciles require a fund to appoint an administrator so that valuation and the investor register are not controlled by the person whose fees depend on them.
For small funds, administration has historically been the largest fixed cost after legal setup, because administrators price for the work of reconciling data from many sources by hand.