This article is contributed by Richard Wilson of Hedge Fund Blogger and provides unique hedge fund marketing tactics that managers should investigate further while attempting to raise capital for their funds. Before taking any of these actions, managers should consult with their compliance and legal counsel for confirmation that they are able to use these methods to market their fund.
Public Relations Management
Public relations has to be one of the most ignored marketing tools of hedge fund managers today. I have worked with over three dozen hedge funds on their marketing plans and capital raising efforts. So far, the most intense public relations effort I have seen set forth was a single press release over a four-year period. This is not to say that any hedge fund that is not publishing at least four press releases per year is doing something wrong. However, many could benefit by simply making themselves more available to the press.
The media is hungry for real time opinions of hedge fund managers, traders and marketers. They need comments on current market conditions, trends in hiring and firing of traders and portfolio managers and what prospects lay ahead for the industry as a whole.
Many hedge fund managers shy away from contributing to stories in the press. I would strongly encourage you to speak with your legal counsel and see if they would approve of your discussions with the media if you stick to industry trends, general market trends and long-term movements you are seeing within the industry.
Top Four Tips for Taking Advantage of Public Relations for your Hedge Fund:
Speak to your legal counsel to check on exactly what you can say or not say to the press.
Develop a list of 10-15 targeted publications which you would like to appear in. Identify the editor of financial columns within that publication or news source and introduce yourself to them as a resource.
Consider writing a book on your insights and experience. Many professionals in the hedge fund industry are often interviewed on TV after they have published a book on a specific topic in the hedge fund industry, such as regulation or quantitative trading. Yes, writing a book sounds extreme to many who are already working 50 hours a week but that is also why it would be so effective to consider doing so. Those with the time and skills to write well are often not the same with those who have the experience and insight to write something unique and valuable.
(NOTE: Richard Wilson recently published a book titled "The Hedge Fund Book: A Training Manual for Professionals and Capital-Raising Executives." We are proud to say our very own Vinod Paul is quoted on pages 21 - 24 in the book.)
One of the most effective ways you can market your hedge fund is by being [four times] more educational and easy to understand than your competition. I wrote in my blog last year that a recent survey showed that over 78 percent of institutional investors will not invest in something which they cannot understand. I would imagine that for high net worth investors this figure is even higher.
While some managers [purposefully] position their fund to appear "black box" and top secret, you could market your fund as being more open, transparent and simple in how you approach explaining your investment process. This does not mean that you ignore advanced methods or models of trading and managing portfolios, but it would require more of a 10,000 foot view and explanation of your investment process instead of the 500 foot views that I often see. The trick in doing this right is balancing providing enough detail and real meat that an institutional investor or consultant will gain some granularity while you don't completely overwhelm high net worth investors or wealth managers who may be less versed in common hedge fund strategies or portfolio management techniques.
Here is a list of four additional ways you may market your hedge fund in a more educational or simple way:
PowerPoint - Dedicate 20 percent of your PowerPoint presentation to educational content. Asterisk all industry terms and note that definitions are provided within the back of the presentation. Explain your investment process so that anyone could understand, at least on a high level how your fund operates. Start 1. with your team, high level investment process and how that all comes together before digging into trading examples or risk management tools.
Folder - Many managers use a folder of marketing materials while meeting with clients. This often includes a one pager, PowerPoint presentation, and a recent quarterly market outlook newsletter written by the PM. It is wise to always include some additional reading within the folder as well. Provide 2-3 white papers written by experts outside of your firm that speak to the trends related to the assets your firm invests in or strategy your firm employs.
Speaking & Writing - This also came up within the last post in this series on public relations but I would highly recommend writing and speaking every week to help build a presence, brand and network within the industry. Speaking at wealth management conferences and HNW related events can be highly effective.
Wealth Management & Financial Planners - One of the most ignored sources of capital for hedge fund managers are small to medium sized wealth management firms and financial planning groups that serve HNW professionals from time to time but don't manage $1B+ in total assets. Many of these groups work as part of a broker-dealer network or RIA and they may only meet in person with 5-10 hedge funds in any on year vs. larger institutions which may meet with several each week. These relationships take a long time to build into effective sources of capital but I have found that if you approach them in a more educational fashion than your institutional leads they can pay off as very sticky long-term accounts.