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Keys to marketing and client relations



With a global menu of more than 18,000 hedge funds, marketing and investor relations have become a key ingredient of success for any fund manager. Whereas in the past a fund’s success could be built almost entirely on performance and trading results, the focus is gradually shifting to include high-quality investor relations and marketing.

Most investors we encounter now collect weekly month-to-date estimates at a minimum, sector and geographic exposure and other aggregate information as a mid-level solution, and some even full portfolio transparency on a daily basis. Providing this information can strain hedge fund and fund of funds infrastructure, but failure to do so can lead to redemptions.

In Asia, PerTrac is seeing a number of new hedge fund start-ups, and the alternative investment industry appears to have tremendous potential to expand in the region. From the start, the new managers seem to recognise the need to market and service both new and existing clients effectively, but many firms are still learning what it means to provide top-notch service in these areas.

PerTrac generally recommends that fund companies incorporate the following processes into their marketing and investor relations workflows. First, they should produce a monthly performance report including basic statistics such as compound annual return, monthly returns, Sharpe and Sortino ratios and standard deviation, as well as complete peer group analysis to put returns into perspective. Graphics are also key to a successful presentation (PerTrac offers a free statistics and reporting guide for fund managers that would like to enhance this portion of their marketing toolkit). 

Secondly, managers should develop a pitch book that succinctly articulates the competitive advantages of the fund, firm and personnel; thirdly, managers should prepare a monthly commentary letter, including information about wins and losses, market and strategy outlook; fourthly, managers need to prepare weekly month-to-date estimates, if the strategy allows; fifthly, managers should determine the level of transparency to offer prospective and current clients and develop an efficient way to deliver this information.

All communications with investors and prospects should be tracked across the firm, so that whoever answers the phone is always apprised of the most recent communication, including e-mail and phone calls as well as in-person meetings. Robust systems for tracking communication are also important for compliance with internal procedures and any regulations that may be enacted in 2010 and beyond.

Lastly, monitoring the liquidity of the investor base can help proactively manage redemptions (and prevent the need for gates).

All of these activities require time, effort and money, but unlike in the past, software solutions designed to specifically meet these needs can now assist managers and minimise the time and staff needed to raise capital, retain investors and guard against operational risks.

The efficiency of these efforts is important, particularly for new hedge fund firms and those with fewer staff. Spending too much time on these activities, or not doing them adequately, can lead to assets under management stagnating or even redemptions.

Institutional investors are increasingly looking beyond performance numbers. It is up to the manager to deliver not just returns but the transparency and timely communication that will help them stand out in an increasingly competitive market.


Meredith Jones is a managing director at PerTrac Financial Solutions


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