Tag Archives: #hedgefunds

August 14, 2015 · 5:32 pm

Marketing Your Fund to Zombie Investors

Gaining the attention and interest of investors and their advisors has always been a challenge. In our online world, it’s become even more difficult to cut through the constant volume of noise. Our growing reliance on electronics has also made it less likely for people to remember anything, because their devices do it for them. This has put new demands on fund marketers, who must re-think how they communicate with target audiences, if they intend to overcome short attention spans and digital amnesia.

Short of having the SEC announce that your fund is under investigation, there’s no quick or easy way to gain the attention of investors. The bad news is that it’s getting even more difficult for funds to establish and sustain investor awareness. Here are two reasons why:

The volume of information available is staggering: we now create as much information every two days as we did from the dawn of man through 2003. The impact of information overload on modern man is that we now have a significantly shorter attention span. Studies have shown that our digital lifestyle has reduced the average attention span from 12 seconds in 2000, to 8 seconds on 2015, which is one second less than that of a goldfish.

As reliance on digital devices has grown, our ability to remember information has been greatly reduced. A recent survey highlighting this “digital amnesia” showed that most adults could not remember current phone numbers – such as their workplace or children’s phones – but could recall their own home phone number from when they were a child. People don’t remember information because their devices now can remember for them.

If the bad news for fund marketers is that it’s more difficult than ever to gain and maintain the attention of investors, then here’s the good news: most of your competitors are doing of lousy job addressing those tasks.

So, within an existing competitive landscape of funds that are absolutely clueless when it comes to marketing, your fund can be exceptional. Here are three simple ways to help you achieve that distinction:

1. Give them something worthwhile: For starters, explain what you stand for, how you are different, how you make decisions, and why you are worthy of their consideration. You’ll need to validate those claims, not only through your own words and deeds, but also through 3rd party endorsements from sources they know and trust. Effective 3rd party endorsements – embodied within media coverage of your firm, a video featuring an investor, or highlights of your presentation at an industry seminar – provide your target audiences with information that appears objective and believable. To hold their attention, your information must also address issues, challenges and opportunities that are important to them…which is unlikely to include your firm’s AUM growth.

2. Make it easy for them to understand you: All of the tools your firm uses to communicate – website, pitch deck, brochures, etc. – should be consistent in what you say, how you say it, and what the materials look like. Most importantly, your communication should be easy for them to understand, regardless of the complexity of the content. Attempting to impress investors with technical jargon and lengthy explanations only serves to shift their attention and interest somewhere else. To measure the readability in your written communication, try the online BlaBlaMeter diagnostic (blablameter.com), which is an admittedly unscientific, but somewhat objective barometer of your fund’s “BS” factor.

3. Speak to them directly and regularly: The explosion of information online has made direct communication even more important. You’ll need to create an internal discipline that ensures meaningful and consistent contact (ideally on a quarterly basis) with existing and prospective investors, as well as those who influence them. The content you send to those audiences – by email or direct mail – should display your fund’s intellectual capital and institutional values without being self-promotional or self-serving. Consider, for example, sending out market commentaries written by respected individuals outside of your firm, or Q&A interviews that you conduct with opinion leaders whose values are aligned with yours. The goal is to make your firm memorable, in a world where remembering is no longer a necessity.

If all of this sounds like too much work, you will likely find greater comfort and continued anonymity simply by hoping that investors take interest in your fund the old-fashioned way…solely through its track record and word-of-mouth recommendations. And if you’re lucky enough to get noticed and remembered by investors in that manner, you are truly exceptional.

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Tagged as #hedgefunds, alternative investment marketing, AUM Growth, fund sales, hedge fund marketing, investor communication, pitch deck, readability

March 11, 2015 · 12:30 pm

A Few Marketing Best Practices for Alternative Investments

Although the lion’s share of alternative funds have yet to dip their toes into Lake Transparency, some small funds are cutting a path for the rest of the industry, in terms of smart marketing…if that’s defined by how clearly they explain their value proposition, and by how well they create investor interest.

Although it doesn’t provide a complete picture, very often you can gauge a fund’s marketing savvy by its website, which in our online world serves as the mother ship for a company’s brand.

So based solely on their websites, here are two small funds that can serve as examples of marketing best practices:

Monterey, California-based Topturn Capital – a single, low volatility hedge fund, and
Lake Forest, Illinois-based SilverPepper – a liquid alt firm offering two sub-advised funds

And here’s why these two firms are exceptional:

Both funds demonstrate that small firms can market themselves very effectively. In fact, smaller funds have a marketing advantage over larger competitors. Fewer people often can mean less politics, a more flexible compliance viewpoint and fewer opinions from the peanut gallery, which serve to dilute core messaging and can kill great ideas.

Both funds tell engaging, believable stories about themselves. Their stories explain their investment philosophy and commitment to their business in very human terms, directly related to their own life experiences. They don’t pontificate; they connect with people.

Both funds use video to tell their stories. Seeing and hearing fund principals makes those individuals and their firms credible and likeable. This visceral connection is critical in a business where “management” is consistently cited as a leading factor in fund selection.

Both funds display thought leadership. Their intellectual capital is showcased, but not in a self-serving manner. Topturn Capital, in particular, succeeds in maintaining market interest and increasing its credibility through well-written blog posts on topics ranging from Ebola to the market impact of presidential cycles.

Both funds understand the importance of brand strategy. All of the website elements – content, messaging, design, navigation – support a well thought-out effort to differentiate their firm’s value proposition, and to make it memorable. These are not cookie-cutter marketing solutions; and they reflects pride, creativity and skin in the game.

Admittedly, the SilverPepper website pushes the marketing envelope, in terms of what’s acceptable to most hedge fund compliance officers. But here’s what’s significant about the emergence of liquid alt firms like SilverPepper: because of their retail orientation and facility with sophisticated marketing tactics, that emerging asset class will indirectly drive hedge funds to show greater courage and creativity in marketing in the years ahead.

For most hedge funds, whether they emulate Topturn Capital or SilverPepper, the adoption of marketing best practices – or any marketing practices at all – is long overdue.

—–

This article appears as the March edition of “Marketing Alternatives,” a monthly column published in the Barclay Insider Report, a newsletter produced byBarclayHedge, a leading provider of alternative fund data.

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Tagged as #hedgefunds, #thought leadership, alternative investment, BarclayHedge, brand strategy, financial services marketing, hedge fund compliance, hedge fund marketing, liquid alternatives, liquid alts, marketing best practices, SilverPepper, Topturn Capital

February 13, 2015 · 10:15 am

The Road to Hedge Fund Transparency: Marketing Essentials and Potential Pitfalls

To survive and prosper in a marketplace where transparency and trust are now valued by investors and promoted by regulators, hedge funds will be increasingly required to build a rational and risk-averse approach to external communication. Ideally, those plans will also avoid many of the non-productive tactics that marketers are known to promote.

Here’s a marketing roadmap designed to achieve that objective:

Build your brand strategy first. This internal discipline yields a unified view and clear expression of what your firm seeks to achieve for investors, how it addresses that goal, what makes it uniquely qualified for consideration, and why investors should select and trust your firm. An upfront articulation of the firm’s value proposition serves as the cornerstone of a written marketing plan that should include: tangible business goals, appropriate marketing strategies and tactics, calendarized activity, budgets and accountabilities. Any firm that operates without a formal plan (which should be simple, and not take months to create), eventually becomes a victim of “trust me it’s working” marketing. No plan = lots of wheel-spinning + no tangible business outcomes.

Create a bona fide website, not a proxy. In an online world, websites are the mother ship of market transparency. If a hedge fund is unwilling to provide on its website essential information related to its capabilities and credibility, then the firm is not really serious about market communication. Ideally, your website should express institutional values, explain investment processes, showcase human capital, provide examples of thought leadership and include inherent 3^rd party endorsements. It’s not a sales pitch or report card. Your website will generate investor interest by allowing visitors to draw their own conclusions about the firm and its potential to help them achieve their goals.

Leverage your firm’s intellectual capital. Thought leadership – which is overused marketing jargon – is a strategy that leverages knowledge and ideas to engage target audiences. Effective thought leadership can involve a broad range of marketing tactics, but should always be designed to achieve measurable goals; not to simply have people think you’re smart. A hedge fund’s intellectual capital represents its most powerful market differentiator, and can be showcased without giving away any proprietary information or methodologies.

Harness the market reach of LinkedIn. LinkedIn has become an important due diligence tool for investors, intermediaries and the financial press. Most hedge funds understand this, and either provide a very basic firm profile, and / or allow its employees to post their personal profiles on LinkedIn. But to harness LinkedIn’s enormous market reach and professional clientele, hedge funds must establish a buttoned-up institutional persona that’s consistent with the firm’s (bona fide) website; ensure that its employees’ profiles enhance the firm’s brand positioning; and take full advantage of appropriate user groups on LinkedIn to raise brand visibility and display its thought leadership.

Hold off on Twitter and other social media sites. Twitter can be a great information source, and most hedge funds should use it exclusively for that purpose: to listen rather than to speak. Few hedge funds have the time or social media sophistication to engage safely and consistently on Twitter, and the compliance risks are significant. Facebook is simply not an appropriate channel for hedge funds, and posting comments on independent blogs or online publications will not yield meaningful results.

Manage press exposure selectively. Beneficial media exposure can provide valuable brand credibility. But this is a high-risk tactic because reporters have agendas, can make mistakes, and are not in business to make your firm look good. However, hedge funds should proactively seek media exposure through participation in targeted editorial opportunities – such as bylined articles, OpEd pieces and certain types of feature articles – if they provide total or nearly complete control over what’s published. Although guest spots on financial news channels such as CNBC can fuel the ego, these are high-risk opportunities that most hedge funds should avoid.

Unfortunately, most media coverage yields no marketing value, because it’s simply hung like a hunting trophy on a firm’s website. To benefit from the implied 3^rd party endorsement, beneficial coverage must be properly integrated into the firm’s direct communication strategy with clients, prospects and referral sources.

Merchandise conference participation. Investor conferences are high-cost tactics that can be effective for hedge funds. But these events also yield low results because firms fail to properly re-purpose the related thought leadership they’ve produced; which can serve as raw material to influence target audiences that are much larger, and sometimes of higher value, than those in attendance at the conference. Doing all the heavy lifting (in terms of content preparation, travel, time away from office and home), but failing to benefit from that investment – both before or after the event itself – represents a tangible opportunity loss.

Forget advertising for now, and perhaps forever. Regulators have not made it easy for hedge funds to understand the rules of the new advertising game, so the industry is better off encouraging the very large players – with deep compliance muscle – to be the first ones on the field. But there are more significant reasons why most hedge funds should never include advertising in their marketing plans. Notably, institutional advertising is expensive, requires a long-term commitment to be effective, and is very difficult to measure or generate a market response. More importantly, at most hedge funds there is an extensive list of marketing strategies and tactics (for example, building an effective website) that should be addressed first, and that will provide a more meaningful return than advertising.

As market dynamics of the investment world drag hedge funds, however reluctantly, into the new era of transparency, there is some good news for those firms. Hedge funds have long demonstrated their ability to sustain a successful business enterprise without traditional marketing tactics. So any benefits that effective market communication might provide for them are very likely to result in incremental asset growth.

In that regard, other vertical industries may eventually point to hedge funds as examples of best practices in branding and marketing. But at the current rate of change, that’s unlikely to occur in our lifetimes.

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Tagged as #hedgefunds, #hendgefundmarketing, #LinkedIn, #marketing, #thought leadership, alternative investment, brand strategy, hedge fund marketing, hedge fund regulation, hedge fund transparency, intellectual capital, JOBS Act, marketing communications, social media marketing, Twitter, web content

January 10, 2015 · 5:44 pm

Hedge Fund Marketing: From Oxymoron to Best Practices

Published in January 2015 Edition

This past September, the well-respected marketing firm, Peppercom, conducted in-depth research involving nearly 300 of the hedge fund industry’s largest firms, to measure how those funds are currently applying standard marketing tools & tactics including websites, social media, the financial press and advertising, one year after the JOBS Act.

Peppercom’s research paper begins with the statement that, “The private world of hedge funds is looking more like Madison Avenue.” But a close examination of the study’s findings suggests that this observation may be wishful thinking.

In terms of marketing sophistication, the hedge fund industry lags far behind all other financial and professional services, across every sub-category. Peppercom’s research shows that:

Nearly all of the largest funds have a website, but most of those websites have no marketing value, and consist of little more than a logo and contact information.
Two-thirds of the largest hedge funds have a LinkedIn presence, but only 10 of those funds post any meaningful content on that social media site. Very few funds have Twitter accounts.
Hedge funds continue to be a hot topic covered by the financial media, but most funds refuse to talk to the press.
The anticipated JOBS Act-related groundswell of advertising by hedge funds “seems more like a trickle than a deluge.” Despite the research study’s sugar-coating (for example, “…mid-sized funds…are beginning to understand the importance of a website.”), hedge fund resistance to marketing is unlikely to abate anytime soon.

And there are both good and bad reasons why these sophisticated, deep-pocketed companies refuse to communicate externally in an effective, transparent manner:

Bad Reason: Misguided Mystique: Many hedge funds embrace the notion that an opaque brand image creates a mystique that’s appealing to sophisticated and well-heeled investors and intermediaries. They believe common marketing practices will diminish their “private club” exclusivity. An OpEd piece published recently on the Hedge Fund Marketing Alliance website sums up the prevailing attitude: “Online universities and community colleges advertise—Harvard and Yale do not.”

Good & Bad Reason: Fear of Visibility: Many funds believe marketing makes them more of a target for regulators. In a business where an S.E.C. inquiry can send investors running for the exits, “out of sight / out of mind” appears to be a prudent risk management strategy. Many funds prefer to restrict market visibility, and even sacrifice potential asset growth, rather than to put the firm’s reputation and entire business in jeopardy by raising its public profile.

Although their trepidation regarding visibility may be well-founded, funds can gain some level of comfort knowing that regulators now publicly encourage market transparency. In October 2013, S.E.C. Chairwoman Mary Jo White stated that, “…hedge fund managers feel they have a new freedom to communicate with the public, to advertise, to talk to reporters, to speak at conferences and, most importantly, communicate with investors openly and frankly. And, you can do these things without the fear of securities regulators knocking on your door, or your outside counsel screaming at you.”

My mother’s advice given decades ago to my two younger sisters regarding teen-aged boys may also apply here. She warned them, “It’s always the quiet ones that you need to keep your eye on.” Based on a similar rationale, regulators may also be more likely to focus attention on funds that have very little to say about the nature of their business.

Good Reason: Marketing Confusion: Regulators and marketers share equal responsibility for the widespread misunderstanding about what’s considered permissible and effective marketing for hedge funds. Regulators create incomprehensible rules of engagement, and marketers offer strategies and tactics that often have no connection with tangible business results, and that sometimes put funds at greater risk of violating fuzzy regulations.

Because of this confusion regarding the definition of a risk-averse and effective marketing strategy, many well-intentioned hedge funds that otherwise support the underlying notion of market transparency will pursue the path of least resistance. Most often, that means doing nothing.

Marketing Essentials and Potential Pitfalls on the Road to Transparency

Changing their existing culture, addressing regulatory concerns and deciphering marketing propaganda are not easy tasks for hedge funds of any size. But to survive and prosper in a marketplace where transparency and trust are now valued by investors and promoted by regulators, hedge funds will be increasingly required to build a rational, risk-averse approach to external communication.Here is a roadmap designed to address that marketing challenge:

Build your brand strategy first. This internal discipline yields a unified view and clear expression of what your firm seeks to achieve for investors, how it addresses that goal, what makes it uniquely qualified to achieve that goal, and why investors should select and trust your firm. This articulation of the firm’s value proposition serves as the cornerstone of a written marketing plan that should includes: tangible business goals, appropriate marketing strategies and tactics, calendarized activity, budgets and accountabilities. Any firm that operates without a formal plan (which should be simple, and not require a lengthy process to create), eventually becomes a victim of “trust me it’s working” marketing.

Create a bona fide website, not a proxy. In an online world, websites are the mother ship of market transparency. If a hedge fund is unwilling to provide on its website essential information related to its capabilities and credibility, then the firm is not really serious about market communication. Ideally, your website should express institutional values, explain processes, showcase human capital, provide examples of thought leadership and include inherent 3^rd party endorsements. It’s not a sales pitch or report card. Your website will generate investor interest by allowing visitors to draw their own conclusions about the firm and its potential to help them achieve their goals.

But increasingly, investors are demanding transparency. An Opalesque survey showed that 98% of more than 100 institutional investors, family offices and UHNW investors had declined to put money with at least one hedge fund manager because of transparency concerns. And a growing body of market research confirms the weak correlation between fund performance and investor contributions. So understanding of a firm’s investment process, rather than brand mystique, is at least as important as its track record as a driver of asset flows.

Leverage your firm’s intellectual capital. Thought leadership – which is overused marketing jargon – is a strategy that leverages knowledge and ideas to engage target audiences. Effective thought leadership can involve a broad range of marketing tactics, but should always be designed to achieve measurable business goals; not to simply have people think you’re smart. A hedge fund’s intellectual capital represents its most powerful market differentiator, and can be showcased without giving away any proprietary information or methodologies.

Harness the market reach of LinkedIn. LinkedIn has become an important due diligence tool for investors, intermediaries and the press. Most hedge funds understand this, and either provide a very basic firm profile, and / or allow its employees to post their personal profiles on LinkedIn. But to harness LinkedIn’s enormous market reach and professional clientele, hedge funds need to establish a buttoned-up institutional LinkedIn presence that’s consistent with the firm’s (bona fide) website; ensure that its employees’ profiles enhance the firm’s brand positioning; and take full advantage of appropriate user groups on LinkedIn to raise brand visibility and display its thought leadership.

Hold off on Twitter and other social media sites. Twitter can be a great information source, and most hedge funds should use it exclusively for that purpose: to listen rather than to speak. Twitter is a content beast that demands constant feeding, but few hedge funds have the time or social media sophistication to engage safely and consistently. Facebook is not an appropriate channel for hedge funds, and posting comments on independent blogs or online publications will not yield meaningful results.

Manage press exposure selectively. Beneficial media exposure can provide valuable brand credibility. But this is a high-risk tactic because reporters have agendas, can make mistakes, and are not in business to make your firm look good. However, hedge funds should proactively seek media exposure through participation in targeted editorial opportunities – such as bylined articles, OpEd pieces and certain types of feature articles – that provide total or nearly complete control over what’s published. Although guest spots on financial news channels such as CNBC can fuel the ego, these are high-risk opportunities that most hedge funds should avoid.

Merchandise conference participation. Investor conferences are high-cost tactics that can be effective for hedge funds. But these events often yield low results because firms fail to properly re-purpose the related thought leadership they’ve produced; which can serve as raw material to influence target audiences that are much larger, and sometimes of higher value, than those in attendance at the conference. Doing all the heavy lifting (in terms of content preparation, travel, time away from office and home), but failing to benefit from that investment either before or after the event itself, represents a tangible opportunity loss.

Forget advertising for now, and perhaps forever. Regulators have not made it easy for hedge funds to understand the rules of the new advertising game, so the industry is better off encouraging the very large players – with deep compliance muscle – to be the first ones on the field. But there are more significant reasons why most hedge funds should never include advertising in their marketing plans. Notably, institutional advertising is expensive, requires a long-term commitment, and is very difficult to measure or generate a market response. More importantly, at most hedge funds there is an extensive list of marketing strategies and tactics (for example, building an effective website) that should be addressed first, and that will provide a more meaningful return than advertising.

Additionally, because hedge funds do not currently depend on marketing for survival, they can act in a deliberate, strategic manner. Hedge funds have the luxury of being able to design and implement their marketing programs incrementally, and to focus on doing a limited number of things very well. In that regard, other vertical industries may eventually point to hedge funds as examples of best practices in branding and marketing.

So perhaps hedge funds are not marketing Neanderthals. They are simply late bloomers.