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Posted by on Sep 27, 2010 in E-Letters |

Tips, Traps and Trends

e-letter from HS Marketing

Key Ingredients: Marketing Adaptability and Resilience

September 2010


Dear Clients and Friends,

A “one size fits all” approach to raising assets in the current environment calls for a new roadmap focused on marketing adaptability and resilience. As the full spectrum of hedge fund investors reflects distinct levels of asset allocation criteria and risk tolerance, managers need to closely assess their readiness within their own business lifecycle to target a specific level from retail through institutions rather than consider investors a homogeneous monolith.

How can managers adapt to fit this environment? “In this period of unprecedented uncertainty, it is critical that hedge funds know their investors, know what those investors require, and understand how to tailor their marketing strategy accordingly,” notes Ron Suber, senior partner/global head of sales and marketing at Merlin Securities. The spectrum of hedge fund investors is arranged, generally, in terms of how “institutional” each type of investor group tends to be. Merlin’s White Paper takes a closer look at each level of the spectrum and offers a roadmap to effective marketing.

In this e-letter, Lisa Vioni, President and CEO of Hedge Connection, one of our strategic partners, provides ten marketing tips and three traps to avoid. Hedge Connection organizes both live and web-based programs for hedge fund managers to gain access to qualified individuals and institutional investors.

        Ten Marketing Tips for Managers

  1. Prepare a thoughtful marketing plan and budget as part of your business plan. Building relationships does not happen in a vacuum. Raising money will cost money.
  2. Develop marketing materials that clearly describe the opportunity you are offering.
  3. Practice your elevator pitch so that you can give it to anyone anywhere. You never know where you will meet a potential investor.
  4. When calling an investor to ‘check in,’ have something meaningful about your market to share with him or her. You want to become the ‘go to’ person in your sector so that when an investor has any questions, they call you. This will help build a meaningful relationship that is based on your expertise as a money manager.
  5. Identify responsibility internally for managing logistical elements of your marketing program (meetings/conference calls/follow-up) so that you are organized and have structure to your plan.
  6. Build an internal investor database including detailed notes on each investor interaction.
  7. Organize a consistent method of communicating with investors.
  8. Use all legal methods to get exposure to investors: i.e. Hedge Connection membership, posting on databases such as Morningstar, present at conferences and attend cap-intro events.
  9. Set goals for building your business and reassess where you are with accomplishing these goals every six months.
  10. Have patience, the capital raising sales cycle can take as long as two years.

        Three Traps to Avoid

  1. Don’t wait to start marketing until you think you have enough assets under management. Building a relationship takes many months. It is more important to establish yourself as an expert in your field so that when the investor is ready to invest in your sector, you are on their short list of possibilities.
  2. Don’t stop marketing because you are having a bad month. You will have good months and bad months; the important thing is that you are able to explain why both occurred. If you cannot explain why your numbers were down, then you are not doing your job. If you have learned something that will make you a better money manager, then you should be able to articulate this within the context of the bad performance. This honest approach will help build trust with an investor.
  3. Make sure that when you hire a third party marketing agent, they are sincere about focusing on helping you build your business. Ask for references and any conflicts they may have with representing your fund.

The quality of adaptability revolves around flexibility to change in light of new circumstances. For many hedge fund managers, taking advantage of a new roadmap will be the most important factor in gaining traction to raise and/or maintain assets. Practicing the art of resilience will enable some managers to take advantage of the above-mentioned tips, while avoiding the traps and potential bumps along the road.

Sincerely,

Holly Singer, President, HS Marketing, LLC www.hsmarketing.com

Princeton Junction, NJ 08550 | tel. 609.275.1303