Hedge Fund Marketing Rules

What Are the Rules for Marketing a Fund to Investors

Brent Gillett, a partner at the Investment Law Group, has contributed a question and answer series covering the establishment of a hedge fund and laws related to hedge funds.

Question:  What are the rules regarding marketing the fund to potential investors?

Answers: Interests in a hedge fund are generally sold pursuant to a private placement exemption and should be marketed very carefully without using any general advertising or solicitation. Generally speaking, the manager should have a pre-existing relationship with everyone who is offered interests in the fund. Furthermore, to remain exempt from registration as an investment advisor at the
state or federal level, a manager cannot hold himself out “publicly” as an investment advisor. Promotional activities involving the use of websites and providing information to organizations that track hedge funds should not be engaged in without the advice of counsel.

Guest author: Brent S. Gillett, partner at the Investment Law Group. To find more information about the Investment Law Group follow this link.

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Tags: What are the rules for marketing, hedge funds, hedge fund marketing, laws for marketing a hedge fund, hedge fund marketing, hedge funds legal questions, legal q and a, investment law marketing

Below is a short guest post by Mark Goormastic of Goormastic Executive Search. This is straight advice from someone who works daily with placing hedge fund professionals within the industry. The only thing I would personally add to this post is that you must have multiple forms of proof that you have raised capital before in the form of current investor contacts, referrals, or letters of recommendation.

I get a lot of inquiries from sales professionals. The question is usually “I would like to get a salaried Director of Marketing position at a small hedge fund. Can you help?”
Maybe. My clients tend to be small hedge funds with investor assets under $100M. When they are willing to pay a salary, they expect results quickly – within six to nine months at the very most.

To bring in, say $5M, within this time frame your book and career history should look like this, from the perspective of a small hedge fund that might consider hiring you:

- You’ve successfully raised money for another small (<$100M) hedge fund and were successful. - We'll define "successful" to mean that you brought in a meaningful volume of allocations, let's say $10M, in the first eighteen months. Not commitments. Actual checks in the bank.

- The hedge fund you successfully raised capital for employed a strategy such that the investors who allocated to that fund would logically have an interest in the fund that is considering you.

If those conditions are true then you might be a great fit for a small hedge fund looking for a Director of Marketing.

Tags: Hedge Fund Sales, Hedge Fund Marketing, Hedge Fund, Hedge Funds, Alternative Investment Marketing, Raising Capital for a career, how to become a hedge fund marketer

Below is a short guest post by Mark Goormastic of Goormastic Executive Search. This is straight advice from someone who works daily with placing hedge fund professionals within the industry. The only thing I would personally add to this post is that you must have multiple forms of proof that you have raised capital before in the form of current investor contacts, referrals, or letters of recommendation.

I get a lot of inquiries from sales professionals. The question is usually “I would like to get a salaried Director of Marketing position at a small hedge fund. Can you help?”
Maybe. My clients tend to be small hedge funds with investor assets under $100M. When they are willing to pay a salary, they expect results quickly – within six to nine months at the very most.

To bring in, say $5M, within this time frame your book and career history should look like this, from the perspective of a small hedge fund that might consider hiring you:

- You’ve successfully raised money for another small (<$100M) hedge fund and were successful. - We'll define "successful" to mean that you brought in a meaningful volume of allocations, let's say $10M, in the first eighteen months. Not commitments. Actual checks in the bank.

- The hedge fund you successfully raised capital for employed a strategy such that the investors who allocated to that fund would logically have an interest in the fund that is considering you.

If those conditions are true then you might be a great fit for a small hedge fund looking for a Director of Marketing.

Tags: Hedge Fund Sales, Hedge Fund Marketing, Hedge Fund, Hedge Funds, Alternative Investment Marketing, Raising Capital for a career, how to become a hedge fund marketer

Below is a short guest post by Mark Goormastic of Goormastic Executive Search. This is straight advice from someone who works daily with placing hedge fund professionals within the industry. The only thing I would personally add to this post is that you must have multiple forms of proof that you have raised capital before in the form of current investor contacts, referrals, or letters of recommendation.

I get a lot of inquiries from sales professionals. The question is usually “I would like to get a salaried Director of Marketing position at a small hedge fund. Can you help?”
Maybe. My clients tend to be small hedge funds with investor assets under $100M. When they are willing to pay a salary, they expect results quickly – within six to nine months at the very most.

To bring in, say $5M, within this time frame your book and career history should look like this, from the perspective of a small hedge fund that might consider hiring you:

- You’ve successfully raised money for another small (<$100M) hedge fund and were successful. - We'll define "successful" to mean that you brought in a meaningful volume of allocations, let's say $10M, in the first eighteen months. Not commitments. Actual checks in the bank.

- The hedge fund you successfully raised capital for employed a strategy such that the investors who allocated to that fund would logically have an interest in the fund that is considering you.

If those conditions are true then you might be a great fit for a small hedge fund looking for a Director of Marketing.

Tags: Hedge Fund Sales, Hedge Fund Marketing, Hedge Fund, Hedge Funds, Alternative Investment Marketing, Raising Capital for a career, how to become a hedge fund marketer

Developing a Hedge Fund USP

Below is a short video explanation of how a hedge fund can and should create a Unique Selling Proposition (USP) so they are not lost in the noise of the industry. This video was created after our team saw that most hedge fund marketing pitch books look very familiar and largely repeat the same goals and methods of investing. This video from HedgeFundPremium.com should help your team create more unique and effective positioning strategies and marketing materials.

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Tags: Hedge Fund, Hedge Funds, Hedge Fund Marketing, Developing a USP, Developing a Unique Selling Proposition, Marketing investment funds, How to find investment fund investors

Developing a Hedge Fund USP

Below is a short video explanation of how a hedge fund can and should create a Unique Selling Proposition (USP) so they are not lost in the noise of the industry. This video was created after our team saw that most hedge fund marketing pitch books look very familiar and largely repeat the same goals and methods of investing. This video from HedgeFundPremium.com should help your team create more unique and effective positioning strategies and marketing materials.

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Tags: Hedge Fund, Hedge Funds, Hedge Fund Marketing, Developing a USP, Developing a Unique Selling Proposition, Marketing investment funds, How to find investment fund investors

What is Third Party Marketing

Below is a 10 minute video on third party marketing trends and insights. Within this video I talk about the definition of a third party marketer, how third party marketing firms charge fees to their investment fund clients, the contractual challenges of the third party marketing industry and how many marketers are now focusing on marketing to one single investment channel. If you are viewing our newsletter via email please click here to watch the embedded video.

Tags: third party marketing, raising capital, investment fund capital raising, investment fundraising, hedge fund marketing, hedge fund sales, hedge fund third party marketer

What is a Third Party Marketing Firm?

Below is a 10 minute video on third party marketing trends and insights. Within this video I talk about the definition of a third party marketer, how third party marketing firms charge fees to their investment fund clients, the contractual challenges of the third party marketing industry and how many marketers are now focusing on marketing to one single investment channel. If you are viewing our newsletter via email please click here to watch the embedded video.

Tags: third party marketing, raising capital, investment fund capital raising, investment fundraising, hedge fund marketing, hedge fund sales, hedge fund third party marketer

Third Party Marketing Industry

Below is a 10 minute video on third party marketing trends and insights. Within this video I talk about the definition of a third party marketer, how third party marketing firms charge fees to their investment fund clients, the contractual challenges of the third party marketing industry and how many marketers are now focusing on marketing to one single investment channel. If you are viewing our newsletter via email please click here to watch the embedded video.

Tags: third party marketing, raising capital, investment fund capital raising, investment fundraising, hedge fund marketing, hedge fund sales, hedge fund third party marketer

Third Party Marketing Industry

Below is a 10 minute video on third party marketing trends and insights. Within this video I talk about the definition of a third party marketer, how third party marketing firms charge fees to their investment fund clients, the contractual challenges of the third party marketing industry and how many marketers are now focusing on marketing to one single investment channel. If you are viewing our newsletter via email please click here to watch the embedded video.

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Tags: third party marketing, raising capital, investment fund capital raising, investment fundraising, hedge fund marketing, hedge fund sales, hedge fund third party marketer

Third Party Marketing Trends & Insights

Below is a 10 minute video on third party marketing trends and insights. Within this video I talk about the definition of a third party marketer, how third party marketing firms charge fees to their investment fund clients, the contractual challenges of the third party marketing industry and how many marketers are now focusing on marketing to one single investment channel. If you are viewing our newsletter via email please click here to watch the embedded video.

View dozens of additional capital raising resources through our Hedge Fund Marketing & Sales Guide.

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Fund Marketing | Practical Tips

A few weeks ago I completed my speech on “5 Best Practices for Hedge Fund Marketing” at the Marcus Evans Fund of Hedge Fund Summit in Boca Raton, Florida. I got connected with some quality hedge fund contacts and ran into a few followers of our sites as well.

Below please find some of the most useful practical fund marketing tips that I suggested during my speech, the full video recording of the speech along with the PowerPoint will be available as part of the training materials within the Hedge Fund Group’s hedge fund certification program within the Level 2 Module on Marketing & Sales.

1. Focus on Building Authority above all else: The power of true authority within an industry trickles down and puts other influential factors into motion which help you develop valuable relationships
2. Move the Free Line: Give away your best ideas within press inquiries, books, interviews, articles, white papers and videos
3. Diverse Investor Case Studies: Have at least two case studies of investors choosing to place capital with your firm for each of the major distribution channels you are focusing on raising capital from. For example have six total case studies if 90% of your efforts are focused on family offices, wealth management firms, and HNW individual selling.
4. The 4 P’s of Marketing Materials: Focus on Pedigree, Process (USP), Portfolio Risk, and Presentation Quality

If you are looking for a speaker on the topic of capital raising, alternative investments or hedge funds please click here.

Tags: Hedge Fund Marketing, hedge funds marketing, marketing, sales, hedge fund sales, selling hedge funds, how to raise capital for a hedge fund, hedge fund marketing speaker

Hedge Fund Marketing | Practical Tips

A few weeks ago I completed my speech on “5 Best Practices for Hedge Fund Marketing” at the Marcus Evans Fund of Hedge Fund Summit in Boca Raton, Florida. I got connected with some quality hedge fund contacts and ran into a few followers of our sites as well.

Below please find some of the most useful practical fund marketing tips that I suggested during my speech, the full video recording of the speech along with the PowerPoint will be available as part of the training materials within the Hedge Fund Group’s hedge fund certification program within the Level 2 Module on Marketing & Sales.

1. Focus on Building Authority above all else: The power of true authority within an industry trickles down and puts other influential factors into motion which help you develop valuable relationships
2. Move the Free Line: Give away your best ideas within press inquiries, books, interviews, articles, white papers and videos
3. Diverse Investor Case Studies: Have at least two case studies of investors choosing to place capital with your firm for each of the major distribution channels you are focusing on raising capital from. For example have six total case studies if 90% of your efforts are focused on family offices, wealth management firms, and HNW individual selling.
4. The 4 P’s of Marketing Materials: Focus on Pedigree, Process (USP), Portfolio Risk, and Presentation Quality

If you are looking for a speaker on the topic of capital raising, alternative investments or hedge funds please click here.

Tags: Hedge Fund Marketing, hedge funds marketing, marketing, sales, hedge fund sales, selling hedge funds, how to raise capital for a hedge fund, hedge fund marketing speaker

Hedge Fund Marketing | Practical Tips

A few weeks ago I completed my speech on “5 Best Practices for Hedge Fund Marketing” at the Marcus Evans Fund of Hedge Fund Summit in Boca Raton, Florida. I got connected with some quality hedge fund contacts and ran into a few followers of our sites as well.

Below please find some of the most useful practical fund marketing tips that I suggested during my speech, the full video recording of the speech along with the PowerPoint will be available as part of the training materials within the Hedge Fund Group’s hedge fund certification program within the Level 2 Module on Marketing & Sales.

1. Focus on Building Authority above all else: The power of true authority within an industry trickles down and puts other influential factors into motion which help you develop valuable relationships
2. Move the Free Line: Give away your best ideas within press inquiries, books, interviews, articles, white papers and videos
3. Diverse Investor Case Studies: Have at least two case studies of investors choosing to place capital with your firm for each of the major distribution channels you are focusing on raising capital from. For example have six total case studies if 90% of your efforts are focused on family offices, wealth management firms, and HNW individual selling.
4. The 4 P’s of Marketing Materials: Focus on Pedigree, Process (USP), Portfolio Risk, and Presentation Quality

Learn more by reviewing our Hedge Fund Marketing & Sales Guide

If you are looking for a speaker on the topic of capital raising, alternative investments or hedge funds please click here.

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Last week I gave a speech entitled, “Top 5 Fund Marketing Best Practices” in Boca Raton at a conference put on by Marcus Evans.

Today we are making the first 25 minutes of the speech available via MP3 Audio File Download. This file may be uploaded to your Ipod, saved to your computer or emailed to others on your team. Please always consult with expert compliance and legal advisors before putting in new marketing strategies or materials into place. To receive the download link for this resource please complete your name and email address below:

Tags: private equity fund marketing, private equity investors, capital raising for private equity funds, richard wilson speech, hedge fund marketing audio file download, alternative investment marketing

Last week I gave a speech entitled, “Top 5 Fund Marketing Best Practices” in Boca Raton at a conference put on by Marcus Evans.

Today we are making the first 25 minutes of the speech available via MP3 Audio File Download. This file may be uploaded to your Ipod, saved to your computer or emailed to others on your team. Please always consult with expert compliance and legal advisors before putting in new marketing strategies or materials into place. To receive the download link for this resource please complete your name and email address below:

Tags: hedge fund marketing, hedge fund sales, capital raising for hedge funds, richard wilson speech, hedge fund marketing audio file download, alternative investment marketing

Last week I gave a speech entitled, “Top 5 Investment Fund Marketing & Sales Best Practices” in Boca Raton at a conference put on by Marcus Evans.

Today we are making the first 25 minutes of the speech available via MP3 Audio File Download. This file may be uploaded to your Ipod, saved to your computer or emailed to others on your team. Please always consult with expert compliance and legal advisors before putting in new marketing strategies or materials into place. To receive the download link for this resource please complete your name and email address below:

Tags: investment fund marketing, investment marketing, capital raising for investment funds, richard wilson speech, hedge fund marketing audio file download, alternative investment marketing

Last week I gave a speech entitled, “Top 5 Hedge Fund Marketing Best Practices” in Boca Raton at a conference put on by Marcus Evans.

Today we are making the first 25 minutes of the speech available via MP3 Audio File Download. This file may be uploaded to your Ipod, saved to your computer or emailed to others on your team. Please always consult with expert compliance and legal advisors before putting in new marketing strategies or materials into place. To receive the download link for this resource please complete your name and email address below:

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5 Unique Hedge Fund Marketing Tactics (3 of 5)

This is part 3 of 5 within a series on unique hedge fund marketing tactics that managers should investigate further while working to raise capital for their funds. Before taking any of these actions please consult with your compliance and legal counsel for confirmation that you are able to use these methods to market your specific fund.

Forget about contacting more investors. Yes, it may seem illogical to forget about contacting new investors while attempting to raise capital, but this may be what you need to do to meet your business goals. Many of the hedge funds I speak to want to be connected with investors, they want lists of family offices, seed capital providers or HNW wealth management firms. While accessing more investor contact details may be a useful resource and improve your marketing efforts it is often not the real constraint which is holding your business back.

No business is perfect, every business has some constraint which if removed would help the business more than anything else. Sometimes this constraint is portfolio management expertise, sometimes it is marketing materials, and many times it is lack of institutionalized processes and tools. Very seldom do I meet with hedge funds which if provided with a long list of 1,000 investors would explode in assets under management.

Most hedge funds do not take the time to right down all of their current business problems or symptoms and ask the why questions needed to identify the root constraint within their business model. A good tool that I have seen used by half a dozen management consulting gurus is the “4 Why Process.” If you ask why something is happening 4 times you will get to the root cause of the problem.

• Initial Problem/Symptom: Why don’t we manage $100M in assets yet? Why?
• Potential Answer: We are not raising capital from wealth management firms as you had hoped. Why?
• Potential Answer: Our marketing materials have not been brought up to part with the competitions, they are light and our investment process is poorly described. Why?
• Potential Answer: We now that you should be paying a consultant or in-house marketer to help with both marketing materials and generating relationships but you have not hired one. Why?
• Potential Answer: We do not have the profits available to hire a full time marketer but we get around to creating a system to share equity, grow relationships with third party marketers or build a marketing related advisory board.

The point of this exercise is to identify what the bottleneck is that is slowing down your growth. A hedge fund can be seen a 20 link chain, you must have all 20 strong links in place to keep the business growing long-term. If 19 links can carry the weight of a $300M fund but one link is only up to par for a $10M fund than you will limit your growth and you may never or only very slowly grow into a $300M fund. The biggest return for your investment of time and money will be to focus on that one broken or sub-par link within your operations, marketing, trading or internal business processes, anything else would be a relative waste of money or energy.

This is a unique marketing technique because it is a reminder that the smartest thing you could do for your marketing and sales campaign may have nothing to do with picking up a phone or buying a database of investors. Before spending more money or valuable time try to consider the following 2 tips for improving your ability to attract investors:

Use the “4 Why Tool” to drill down deeper into the top 5 problems that you see your fund facing right now. Often times 3-5 problems will often be symptoms of a single root cause which can be directly addressed.

Ask others including your advisory board, current investors, potential investors and co-workers what is holding your fund back. Do not settle with two word surface answers and try to identify what 3-5 action steps your fund could take this quarter to improve how you are positioned and address the #1 limiting factor in your business.

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Tags: Hedge fund marketing, capital raising, fund marketing, third party marketing, hedge fund, hedge funds, private equity, alternative investments, marketing, sales, fundraising

5 Unique Fund Marketing Tactics (3 of 5)

This is part 3 of 5 within a series on unique hedge fund marketing tactics that managers should investigate further while working to raise capital for their funds. Before taking any of these actions please consult with your compliance and legal counsel for confirmation that you are able to use these methods to market your specific fund.

Forget about contacting more investors. Yes, it may seem illogical to forget about contacting new investors while attempting to raise capital, but this may be what you need to do to meet your business goals. Many of the hedge funds I speak to want to be connected with investors, they want lists of family offices, seed capital providers or HNW wealth management firms. While accessing more investor contact details may be a useful resource and improve your marketing efforts it is often not the real constraint which is holding your business back.

No business is perfect, every business has some constraint which if removed would help the business more than anything else. Sometimes this constraint is portfolio management expertise, sometimes it is marketing materials, and many times it is lack of institutionalized processes and tools. Very seldom do I meet with hedge funds which if provided with a long list of 1,000 investors would explode in assets under management.

Most hedge funds do not take the time to write down all of their current business problems or symptoms and ask the why questions needed to identify the root constraint within their business model. A good tool that I have seen used by half a dozen management consulting gurus is the “4 Why Process.” If you ask why something is happening 4 times you will get to the root cause of the problem.

• Initial Problem/Symptom: Why don’t we manage $100M in assets yet? Why?
• Potential Answer: We are not raising capital from wealth management firms as you had hoped. Why?
• Potential Answer: Our marketing materials have not been brought up to part with the competitions, they are light and our investment process is poorly described. Why?
• Potential Answer: We know that you should be paying a consultant or in-house marketer to help with both marketing materials and generating relationships but you have not hired one. Why?
• Potential Answer: We do not have the profits available to hire a full time marketer but we get around to creating a system to share equity, grow relationships with third party marketers or build a marketing related advisory board.

The point of this exercise is to identify what the bottleneck is that is slowing down your growth. A hedge fund can be seen a 20 link chain, you must have all 20 strong links in place to keep the business growing long-term. If 19 links can carry the weight of a $300M fund but one link is only up to par for a $10M fund than you will limit your growth and you may never or only very slowly grow into a $300M fund. The biggest return for your investment of time and money will be to focus on that one broken or sub-par link within your operations, marketing, trading or internal business processes, anything else would be a relative waste of money or energy.

This is a unique marketing technique because it is a reminder that the smartest thing you could do for your marketing and sales campaign may have nothing to do with picking up a phone or buying a database of investors. Before spending more money or valuable time try to consider the following 2 tips for improving your ability to attract investors:

Use the “4 Why Tool” to drill down deeper into the top 5 problems that you see your fund facing right now. Often times 3-5 problems will often be symptoms of a single root cause which can be directly addressed.

Ask others including your advisory board, current investors, potential investors and co-workers what is holding your fund back. Do not settle with two word surface answers and try to identify what 3-5 action steps your fund could take this quarter to improve how you are positioned and address the #1 limiting factor in your business.

For Part 1 and 2 of this series please see the links directly below:

1. 5 Unique Hedge Fund Marketing Tactics (1 of 5)
2. 5 Unique Hedge Fund Marketing Tactics (2 of 5)

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Hedge Fund Speeches

I am preparing for two speeches this week, one at the Marcus Evans Fund of Hedge Funds conferences in Boca Raton on June 15th and one for the TAAAP Hedge Fund Startup Panel in New York City on June 18th. In doing so I am trying to come up with the most common or critical questions that $1M-$900M hedge fund managers have on hedge fund marketing and hedge fund startups.

I have posted a few of the most common questions I have received below, but are there 3-5 pieces of information, advice or questions which you wish would be covered at one of these two events? Is there something you would like to hear talked about more within the areas of either hedge fund marketing, raising capital or starting a new fund?

If you do have a few points which we should be covering at these events please email your comments in to Richard@HedgeFundGroup.org. Below are some of the common questions I receive which will be covered at these two events:

• What is the best way to approach raising capital from wealth management firms and financial advisors?

• How should we look to work with family office wealth management firms?

• Investors want long track records and $100M+ in assets before investing but we cannot get there until a few try us out and help us get up to that size, what do we do?

• Do you know how to obtain seed capital for our hedge fund?

• What channels of investors should we invest our time in pursuing at different asset levels?

• How can I tell one prime brokerage firm from the rest? We are a small fund and we don’t want to work with four different prime brokerage firms at once.

• How can we get the attention of third party marketers and larger third party marketing firms to help us raise capital? Most that we speak to want $80-$100M and a 5 year plus track record before they will help us, but at that point we probably will not need their help.

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Hedge Fund Inflows

Below is a short article from Bloomberg on the level of hedge fund asset inflows for April, the highest seen in 9 months now:

Hedge funds attracted $15.4 billion in April, the biggest inflow in nine months, as managers had their best performance in more than three years on surging global stock prices, according to Eurekahedge Pte.

Gross inflows to the industry were the largest since August, based on preliminary estimates, according to Ankur Samtaney, an analyst at the Singapore-based research firm. The Eurekahedge Hedge Fund Index, tracking more than 2,000 funds globally, gained 3 percent in April, bringing its year-to-date advance to 3.9 percent, based on 70 percent of the funds reporting, the firm said in a report.

Hedge funds benefited as global stocks surged 11 percent in April, as measured by the MSCI World Index of shares in 23 developed nations. Fund managers are beating global benchmarks in 2009 after suffering the worst year on record in 2008. source

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Marketing Tactics

5 Unique Hedge Fund Marketing Tactics (2 of 5)

This is Part 2 of 5 within a series on unique hedge fund marketing tactics that managers should investigate further while working to raise capital for their funds, to read Part 1 please click here. Before taking any of these actions please consult with your compliance and legal counsel for confirmation that you are able to use these methods to market your specific fund.

Educational Marketing – One of the most effective ways you can market your hedge fund is by being 4x more educational and easy to understand than your competition. I wrote here in my blog last year that a recent survey showed that over 78% of institutional investors will not invest in something which they cannot understand, I would imagine that for HNW investors this figure is even higher.

While some managers purposely 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 meant 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 overwhelming HNW investors or wealth managers who may be less versed in common hedge fund strategies of portfolio management techniques.

Here is a list of 4 additional ways you may market your hedge fund in a more educational or simple way:

1. PowerPoint – Dedicate 20% 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 with your team, high level investment process and how that all comes together before digging into trading examples or risk management tools.
2. 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.
3. 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.
4. 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.

This was Part 2 of our 5 Part series called “Unique Hedge Fund Marketing Techniques”. To view part 1 of this series on public relations for hedge funds please click here.

Also check out our Hedge Fund Marketing & Sales Guide.

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Marketing Tactics

5 Unique Hedge Fund Marketing Tactics (2 of 5)

This is part 2 of 5 within a series on unique hedge fund marketing tactics that managers should investigate further while working to raise capital for their funds. Before taking any of these actions please consult with your compliance and legal counsel for confirmation that you are able to use these methods to market your specific fund.

Educational Marketing – One of the most effective ways you can market your hedge fund is by being 4x more educational and easy to understand than your competition. I wrote here in my blog last year that a recent survey showed that over 78% of institutional investors will not invest in something which they cannot understand, I would imagine that for HNW investors this figure is even higher.

While some managers purposely 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 meant 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 overwhelming HNW investors or wealth managers who may be less versed in common hedge fund strategies of portfolio management techniques.

Here is a list of 4 additional ways you may market your hedge fund in a more educational or simple way:

1. PowerPoint – Dedicate 20% 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 with your team, high level investment process and how that all comes together before digging into trading examples or risk management tools.
2. 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.
3. 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.
4. 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.

This was Part 2 of our 5 Part series called “Unique Hedge Fund Marketing Techniques”. To view part 1 of this series on public relations for hedge funds please click here.

Also check out our Hedge Fund Marketing & Sales Guide.

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Public Image Problems of Hedge Funds

While G20 leaders meet and among other things discuss the global regulation of hedge funds it is important to consider what we as hedge fund professionals can do to help improve the overall image and collective actions of the hedge fund industry. At some point it is in the best interest of everyone within the industry to not only act with the best intentions but to also take it one step further and pro-actively communicate a consistent message of transparency and trust to fellow employees, investors and the general public.

There are concretre things which hedge fund managers can take action on today to help improve their ability to manage their image and their share of the hedge fund industry’s image through their investors, press inquiries and the conferences and networking events they attend. A few steps which can be taken could include:

1. Creating a Formal Board of Advisors: I have seen some hedge funds grow not because they have hired the most third party marketing firms or spent the most on face-to-face paid introductions but because they sought advice and advisory from a diverse and experienced group of industry professionals. Building a board of advisors of 4-12 professionals with experience in running the portfolio management, marketing and operations of a fund can make the difference between making it to the $100M and $1B marks or staying off the radar of most investors forever.
2. Managing Your Public Relations: No, you do not need to spend $12,000 a month on a public relations consultant but at the very least you should speak with other managers on hwo they handle inquiries, speak with your compliance advisor about what you can say and not say and decide as a fund what clear messages you will be trying to send when there are opportunities to speak with the press or at an event or conference. These opportunities are numerous for those who seek them and are ready to execute when the time is right.
3. Creating an Ethics Policy: Every fund, from the three person startup to the 300 employee multi-billion dollar funds should have an ethics policy. This policy should be public, followed and principles-based as much possible since new situations arise daily which may not fit a rigid lists of rules and commands.
4. Increase or Emphasize Your Skin in the Game: Many investors, press professionals and consultants I speak with often forget that a good number of hedge fund managers have invested within their own portfolios. If you have 70-100% of your net worth or liquid net worth invested within your fund, explain this to your investors it is suprising how seldom this is mentioned within current industry marketing materials. You need to have something to lose if clients lose, in many cases investors want a group which is motivated to quickly cut potential losses and protect the portfolio above all else.

Tags: hedge fund marketing, hedge fund, hedge funds, public image of hedge funds