Courtesy of Bruce Frumerman
Editor Note: Marketing and Communication techniques for hedge funds are often no different than the techniques other service-centric businesses need to focus on. Its all about differentiating yourself from competitors and developing messages that distinguish yourself and ones that are clear, crisp and easy-to-grasp. We don't often profile 'competitors' in our posts, but we're happy to make an exception in the case of this simple, but important tutorial for masters of the universe who often believe what they are saying makes sense...even if their audience remains confused.
Have you taken notice of what SEI reports in 6 Ways Hedge Funds Need To Adapt Now, which addresses what it takes to succeed in the hedge fund business today? This sixth annual global survey of institutional hedge fund investors, with insights from roundtables with industry experts, reports that the key challenges hedge fund firm owners face today include the need to be able to demonstrate a sustainable edge and a clear value added, and to have business and marketing acumen.
SEI notes that seven out of ten institutional investors responding to its survey complained that “there are too many look-alike strategies in the hedge fund industry today.” Investors are not just looking for absolute returns, but for “differentiated alpha sources” that can produce non-correlated returns.
But, it is not enough for hedge funds to distinguish themselves in terms of their pedigree, talent, strategies, and performance, SEI observes. They need to “clearly articulate their investment process, and explain what makes their results repeatable (not to mention worth the fees they are asking).”
At too many hedge fund firms the owners never put the full detail of their hedge funds’ investment process stories in print. Verbal elaboration at an initial sales meeting to explain what your flip chart bullet points were meant to convey is not going to be remembered four or fourteen months down the road when a family office, institutional investor or wealth management firm may be getting around to discussing your fund and a few others with similar performance and risk characteristics. This often results in coming across as a commodity-like investment choice rather than a differentiated hedge fund with a value-added portfolio management approach.
Hedge fund marketing materials should make it easy for investors to conduct their due diligence. Too often they do not. While the pitchbook is the right tool for communicating data-based information (charts, graphs and numbers) it is the wrong leave-behind marketing tool for delivering a compelling and detailed explanation of investment process, which is text based content. An additional marketing collateral sales tool is required
For the entire article (which links to Frumerman's firm), please click here to FinAlternatives