How “omnipresent” client conferencing is a game-changer for hedge fund manager-investor relationships
The increased frequency of client communications during the pandemic has been a “game-changer” for the hedge fund manager-allocator dynamic, according to speakers on the fundraising and investor relations panel at this year’s hedgeweekLIVE Technology Summit.
The discussion explored how investor relations and fundraising has been reshaped by the Covid-19 pandemic, and weighed up how the past 15 months of virtual networking may have permanently altered client communications, capital introduction, investor appetite and more.
Greg Zaffiro, partner and head of IR and marketing at Electron Capital, a global long/short equity manager which manages more than USD2 billion and focuses on mainly on public utilities, said the frequency of investor updates has been a seismic shift.
“It’s much more than just your quarterly update, or even monthly update,” Zaffiro observed, adding the change is underpinned by a greater degree of transparency which was boosted by an early switch from dial-in telephone calls to video conferencing. He believes that move has empowered investors to more closely probe managers on portfolio decisions and opportunity sets.
“That sort of feedback has really never been omnipresent as it is today,” he added. “It’s been a game-changer in terms of the level of transparency.”
At the other end of the spectrum, Paul Frost-Smith, founder and CEO, Argentium Digital Asset Management, also agreed the process has changed “dramatically”.
Frost-Smith, who ran multi-strategy hedge fund Castlegrove Capital Management in the early 2000s, and who is now in the process of launching a new crypto-focused strategy, told the panel that all of his new investors, save for friends and acquaintances who offered initial support, are ones he has never met in person.
He suggested the format of investor meetings has also shifted — from in-person investor meetings lasting a couple of hours to shorter Zoom calls followed up by additional questions to specific individuals several days later. “It’s so different from the previous world,” he said. “It’s manageable, but it’s much more fragmented.”
Wednesday afternoon’s session also mulled the difficulties in attracting new investors in the prevailing digital-first world, and how the traditional challenges of communicating trust and competence have been magnified over the last 15 months. Speakers also noted how hedge funds’ solid performances last year meant there has been little need for investors to substantially switch their portfolios – outside of one or two underperforming managers – which brought extra headaches for those firms hoping to attract new capital.
“In 2021, people have started to put systems in place where they can do new business and move forward with new allocations and new investments,” said Andrew Relph, head of business development at event driven equity hedge fund Burren Capital Advisors. Burren offers managed accounts, Cayman funds, and UCITS structures, and Relph said it has been “a lot easier” to raise capital for UCITS vehicles during the pandemic. “Allocators seem happier with a regulated structure, and the liquidity that UCITS provides,” he noted.
Zaffiro added: “Customisation coupled with additional transparency gets that comfort and trust which can be so elusive in this digital environment.”
Elsewhere, Frost-Smith outlined the additional burdens of rolling out a strategy in the fast-moving and often-volatile digital assets space, while Relph hoped that one potential positive outcome from the pandemic would be a greater streamlining of the administrative burden that clients face. The session also heard how one hedge fund in the process of launching is developing its own app to allow investors to log in and track their positions in real time.
“Technology still has a large role to play in terms of ease of access and ease of use for investors into hedge funds,” Relph added.