Fund Accounting Software for AIFs — What to Look For (Comparative, Non-Promotional)

Choosing fund accounting infrastructure is a decision most first-time AIF Managers make once and then live with for years — here's a framework for evaluating options on their merits rather than on which vendor pitched hardest.

Framing the Decision Correctly First

Before comparing specific platforms, a Manager needs clarity on what the software actually needs to do independently versus what will be handled by an external fund administrator (covered in our companion piece on administrator selection). Some Managers run fund accounting entirely in-house on a dedicated platform; others rely on the administrator's own systems and only need a lighter internal tool for portfolio tracking and management reporting. This decision shapes everything else in the evaluation.

Core Capability: Multi-Currency and Multi-Series NAV Computation

For any AIF beyond the simplest single-scheme structure, the platform needs genuine capability to compute NAV across multiple share classes or series (common where a fund offers different fee terms to different investor tranches), and — for funds with foreign investors or offshore feeder structures — clean multi-currency handling that doesn't require manual conversion workarounds. A platform that handles this natively, rather than through spreadsheet-based patches layered on top, meaningfully reduces operational error risk as the fund scales.

Capital Account and Waterfall Modelling

The software needs to model each investor's capital account accurately — contributions, distributions, management fee allocation, and carried interest calculation through the fund's specific distribution waterfall — without requiring the accounting team to maintain a parallel spreadsheet model as the "real" source of truth. If a platform can't natively handle the fund's actual waterfall structure (European vs American style, GP catch-up mechanics, hurdle-rate calculations), it becomes a liability rather than an efficiency tool, since discrepancies between the software's output and the manually-verified "true" numbers erode confidence in the system itself.

Portfolio Valuation Workflow Support

Beyond pure accounting, look for structured support for the fund's valuation process — the ability to record valuation methodology and support documentation against each portfolio holding, track valuation history over time, and generate the audit trail a statutory auditor or SEBI inspection will eventually want to see. Platforms that treat valuation as a bolt-on rather than a core workflow tend to leave this documentation scattered across email and separate files, exactly the kind of gap that surfaces awkwardly during an audit.

Regulatory Reporting Integration

Given the volume and specificity of SEBI's AIF reporting requirements, evaluate whether the platform has built-in templates or export formats aligned to current regulatory filing requirements, and — critically — how quickly the vendor has historically updated these templates when SEBI has changed reporting formats in the past. A platform that lags behind regulatory changes shifts that burden back onto the Manager's compliance team regardless of what the sales pitch promised.

Integration With the Custodian and Administrator

Fund accounting software rarely operates in isolation — evaluate specifically how cleanly it exchanges data with the fund's chosen custodian and administrator (covered in our companion pieces on selecting each), since a platform requiring manual data re-entry between systems introduces exactly the reconciliation risk good fund accounting infrastructure is meant to eliminate.

Data Security and Access Controls

Given that fund accounting systems hold sensitive investor financial data (relevant to the DPDPA obligations covered in our companion piece), evaluate the platform's security certifications, role-based access controls, and audit logging of who accessed or modified what data and when — a genuine requirement for a Manager's own governance, not just a vendor feature checklist item.

Total Cost of Ownership, Not Just Licence Fees

Look beyond the quoted licence or subscription fee to implementation cost, ongoing support responsiveness, and the cost of any customisation needed to fit the fund's specific structure — a platform with a lower headline price can become considerably more expensive once these factors are accounted for.

Choosing Infrastructure That Scales With the Fund

The right fund accounting platform is one that fits the fund's actual complexity today and has genuine room to scale as AUM and investor count grow, rather than one chosen purely on price or a compelling initial demo. We help fund managers evaluate this decision against their specific structure and regulatory reporting needs.

This article is for general informational purposes and does not constitute a recommendation of any specific vendor or platform.

CA Anuj Desai