Branding 201: Hedge Fund Marketers Now Mind What They Call Themselves

When politics and perception intersect, companies operating across various industries and disciplines often find themselves facing an “image issue.” Personnel Managers have become Human Resources and Human Capital Executives, Stockbrokers have since labeled themselves “Financial Advisors” and the list goes on and on. In the financial services space, labels are changing almost as quickly as traders change their fashion-focused striped socks.

As noted in March 26 WSJ column by Rob Copeland “What’s In A Name? Funds Hedge”, there is a burgeoning trend on the part of so-called ‘hedge funds’ to recast themselves in a manner that distances themselves from the ubiquitous phrase that has more negative connotations than not, as best evidenced by Copeland’s opening line: “One of the keys to running a hedge fund is learning how to say you don’t.”

Because brand recognition in the hedge fund industry is more often driven by positioning vs. reported trading positions and related returns, and because many in this highly-competitive industry are continuously competing for investment assets to manage, its no surprise that some of the smarter marketers among this crowd are going to great lengths to stifle the swagger image and in particular, the sexy phrase “hedge fund.” Instead, other terms are being introduced that more easily pass muster with asset allocators such as public and corporate pension funds, endowments, and Family Offices; folks who want better than average returns, but, as best evidenced by CalPRS, the world’s largest public plan sponsor, have down-graded allocations to the ‘hedge fund category.’

The takeaway is that this $3trillion industry (as measured by assets under management) with more than 15,000 ‘managers’ is undergoing a rebranding phase. To those who embrace the notion that “Perception is Reality”, based on our own branding and positioning guidance and related financial industry marketing experience here at The JLC Group, we’d opine that It’s All About Presentation; appealing to the sensibilities of your targeted audience is the key element to framing your value proposition. Within the context of an industry in which there are more than 15,000 direct service providers catering to politically-sensitive fiduciaries, distinguishing what sets you apart is crucial. How you label yourself is, per Copeland’s observations, evermore critical.

Sidebar note: A perfect illustration of nuance-sensitive name convention from a hedge fund industry service provider is coincidentally a JLC Group client, Rareview Macro LLC. Among other value-adds, the firm publishes a daily, subscription-based investment newsletter focusing on global macroeconomic insight and investment strategies. The client, “Rareview Macro” positions itself (appropriately when taking into account complementary services) as “global macro think tank”, and the company’s name, “Rareview,” coupled with the banner of its daily commentary “Sight Beyond Sight” is, in our humble opinion, metaphorical magic.

As Copeland continues in his piece:

“Grappling with years of uneven performance, image problems and deep-pocketed clients who have publicly distanced themselves from the industry, hedge-fund managers are taking pains to avoid the moniker….

Baupost Group LLC, Och-Ziff Capital Management Group LLC and Pershing Square Capital Management LP are among the industry stalwarts looking to change the script. In communication with clients and public filings, they have ditched the term “hedge fund” in favor of catchall descriptors such as “alternative asset manager,” “investment holding company” and “private partnership.”

The entire WSJ column can be viewed by clicking on this link.

Branding 201: Hedge Fund Marketers Now Mind What They Call Themselves