In a crowded market where fund-raising is challenging, hedge fund managers need to make sure they are clearly articulating their investment story. Professional supporting materials to get their thesis across to potential investors are also critical to raising funds. Strategic partnerships are also becoming more common in the industry as hedge fund managers look to leverage the distribution power of larger, more traditional money managers.
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In a crowded market where fund-raising is challenging, hedge fund managers need to make sure they are clearly articulating their investment story. Professional supporting materials to get their thesis across to potential investors are also critical to raising funds. Strategic partnerships are also becoming more common in the industry as hedge fund managers look to leverage the distribution power of larger, more traditional money managers.
“Many hedge funds are money managers, not marketers. They often struggle to talk to the right people and to convert leads, into prospects and then into sales,” says Dan Sondhelm, CEO of Sondhelm Partners.
If they want to grow their business and gain scale, hedge fund managers need to take a strategic approach. First off, they should take stock of what kind of business they are running – are they a start up or a well-established fund? Do they have a sales process? How are they engaging new prospects?
In answering questions such as these, hedge fund managers can isolate any problem areas, set out clear objectives and devise a plan which will help achieve those goals.
Build the basics
“They first need to set the stage and develop the fundamentals,” notes Sondhelm, “They need a solid foundation to build a house. And this includes a professional website, a strong pitchbook and a robust communications infrastructure.”
When handling press enquiries, managers also need to consider the messages they are giving the market and ensure these are relevant and consistent with their investment thesis. For example, a bottom-up stock picking manager should not give comment on issues like the Federal Reserve interest rate moves. “This is because when an investor carries out their due diligence, they will come across those articles and potentially get confused about what the manager’s expertise really is,” Sondhelm explains.
This consistency also should extend into the content a hedge fund manager creates and publishes. The communication with clients needs to be relevant and engaging. Sondhelm recommends making use of digital tools when pushing out content to help foster new business leads and nurture those leads with further relevant content.
Partner with distribution
Finally, another key development in the hedge fund world has been the creation of strategic partnerships. Sondhelm outlines the different ways these can work: “Many traditional investment managers are looking to partner with hedge funds or investment managers with alternative strategies. These firms already have sales and marketing. They’re looking for good investment managers to partner with.
They might take over the hedge fund and hire the individual managers as sub-advisers. Alternatively, they might suggest creating a fund or interval fund, which is a closed-end mutual fund that doesn’t trade on an exchange and only allows investors to redeem shares periodically in limited quantities. One side would manage it. The other side would do everything else.
“There are also a number of firms such as investment management or private equity shops that want to partner with hedge fund managers for an equity stake. They can either take over the firm or have some sort of joint venture to allow them to manage distribution. This is beneficial to the hedge fund manager because it allows them to retain control while adding distribution scope without building it themselves.”
Dan Sondhelm, CEO Sondhelm Partners – Dan Sondhelm is CEO of Sondhelm Partners, a firm that helps hidden gem and name brand alternative and traditional investment managers attract investors, strengthen credibility, and build brands.
Sondhelm Partners won Hedgeweek’s Best US Third-Party Marketing Firm award for 2022
For more information, visit www.sondhelmpartners.com.
