10 tips every hedge fund marketer needs
10 tips every hedge fund marketer needs to improve prospects in the coming year.
February 02 · 10 min read
Are you looking for some tips aimed at hedge fund marketers to improve your prospects in the coming year? We can all agree that getting your campaign’s tone right is essential if you want to attract investors. After all, what use is a hedge fund without investors?
Hedge funds are notoriously hard to position properly, and institutional investors are hard to impress, they need to do their full due-diligence and be convinced of the ability of the hedge fund manager. A first-rate marketing plan is required to impress prospective investors. From London to New York, the hedge fund industry will always be hard at work on their hedge fund marketing strategy.
If you are new to the hedge fund business, you should know that various positive points can turn a hedge-fund-managers life into a dream situation. We have all read stories about hedge fund managers becoming billionaires, and you see the reports in the press regularly.
In addition, the world of the hedge fund industry seems exciting due to its exclusive and secretive reputation compared to the world other financial services and asset managers inhabit. The fight for allocations of investments is exciting.
With some start-up capital, it can be relatively easy to start a hedge fund operation. The coronavirus situation has made it an ideal business in many ways due to the low amount of face-to-face time needed and the use of digital marketing.
The challenge is in implementing risk controls, hiring the right staff, fundraising and making sure that the firm is run as a profit-making enterprise. The demand to always produce a positive performance with your hedge fund marketing can be a real challenge. Financial services can be rewarding if done right.
A hedge fund needs to be built like any other business start-up. You must clearly define your investment and fundraising strategy and communicate it properly to staff and potential investors.
Institutional investors will always need a lot of convincing. You will need to develop a convincing hedge fund marketing plan, acquire the most impressive and competent staff, look for reliable start-up capital sources, and have an excellent track record.
You need to keep up-to-date about new advances in the hedge fund marketers’ world as your competitors are likely to be incredibly well informed. There are always ups and downs in the hedge fund marketing industry, with many top players and portfolio managers going out of business every year.
Just in 2018 alone, more than $80 billion was withdrawn from hedge funds by institutional investors, and according to CNN, more than 400 funds failed.
Poor performance and high fees are the enemy and mean death to those hedge funds. However, it is not all bad news, as the same year there was still an estimated $3 trillion under hedge fund management.
The following year produced excellent results with the HFRI Fund Weighted Composite Index, which follows the whole industry, reported the best year for hedge funds since 2009 and a return of 10.4%.
You should always remember that a hedge fund should be run as a proper business with long-term aims and a systematic approach. A hedge fund should not be looked upon as a short-term moneymaking operation.
Top tips for every hedge fund manager
In many cases, you will be trying to impress an institutional investor, so it is vital that your hedge fund marketing strategies are right. Here are 10 tips every hedge fund marketer needs.
#1 You need to define your strategy clearly
There are times that some hedge fund start-ups forget or underestimate how vital a clearly defined hedge fund investment strategy can be. Public relations is important, as is having a good value.
You need to improve and define your hedge fund marketing strategy until it is at the point that you can easily explain it to anyone. Your staff needs to know it inside out and you need to have it so that you can perfectly explain it to initial investors.
Your hedge fund strategy must withstand due-diligence from potential investors, so you need to be ready to answer any questions and defend your marketing strategies. Above all, it needs to be credible for making a profit after deducting costs for running your hedge-fund.
Any marketing strategy that has not been seen to be tested under real market conditions will have little credibility with a potential investor or consultant. There are too many inexperienced hedge fund managers out there who don’t seem convincing.
While following legal and ethical rules, you should carry out as much research on your competitors as possible. It is likely that any potential investors have looked at all of the hedge fund options on the market. It should be the aim of hedge fund marketers to be better, impressive and more organized.
All hedge fund marketers should do some regular performance research to ascertain what marketing strategies are currently effective, which are not, and why those trends are happening.
You should test your hedge fund’s pre-launch and find out if your strategies are working well in competitors’ projects. You can always tweak your marketing strategy and add something innovative. You can learn a lot from competitive intelligence and apply it directly to your campaign.
#2 Figure out what is your competitive advantage
You need to prove to potential investors that your hedge fund has a competitive advantage over all others. Show exactly why they should choose your hedge-fund and you, particularly as an asset manager.
You can show this in many ways. It can be an advantage in the supply of information, trading, marketing, or resources. An example of a marketing advantage could be good relations with high net worth investors.
Working from family offices can be a good sign of stability
#3 Have effective ways to find seed capital
Finding seed capital is vital for any new hedge fund, you always need enough capital to fund your operation. The level of funding required will depend on several factors, including your investment partners, your cost structure, and how many staff you employ.
The size of your hedge fund has an effect also. Some hedge fund managers claim to be able to make a profit while managing assets around the $10 million range, while others claim they need over $100 million. It really depends on your marketing strategy and how you plan to survive and thrive in the long-term.
The optimum number is likely somewhere in the middle. We all have our own way of doing things and huge profits are possible with relatively little investment.
#4 Never stop studying the hedge fund industry
No matter how experienced you are, you should make it a habit to keep studying the hedge fund markets. Read all of the newsletters and blogs, and see if you can join a hedge fund club or association to get the latest info from those that work in the asset management industry.
These methods can teach you a surprising amount. You can keep informed about the major players, the latest tactics, which differentiates the various forms, and the latest management strategies.
#5 Develop a comprehensive sales and marketing plan
Making a sale is your ultimate aim - nothing happens before you make a sale. A sales plan is essential to find potential investors and turn them into clients.
You need to define where you will raise assets. It could be from high net-worth individuals, wealth management offices and RIAs, corporations, family and friends, etc.
The quality of your marketing plan will have a significant effect on your ability to persuade those people to invest in your hedge fund.
#6 Find the best lawyer available
This is great advice for any business you get involved with, but it is essential if you are a hedge fund manager. An experienced asset management lawyer is an investment as they can save you a fortune by helping you avoid obvious mistakes and pitfalls. They can help you build relationships and introduce you to useful hedge fund industry insiders. They can also invite you to networking evenings such as private capital introduction dinners.
Investing in a top lawyer will be impressive to others as it shows your serious intentions to be in the asset management industry for the long-term.
#7 Consider risk management from all angles
Hedge fund managers rely on having proper risk management in place. Your hedge fund must have a competitive and concrete method for managing both portfolio and business risk. Otherwise, the hedge fund industry won’t view you as a serious operator or likely to attain long-term goals.
You can utilize professional risk managers to mitigate risk and make sure it is properly accounted for and hedged.
#8 Build out your technology
Most of the trading nowadays is done using technology. You must decide whether to purchase your trading systems from an expert designer or build them in-house.
Building in-house gives you more flexibility and security, but buying from an expert is easier and quicker.
#9 Definitely choose a prime brokerage
An early mistake many hedge fund firms make is not realizing how important choosing the right prime brokerage firm can be. They can be a great partner or a hindrance.
A prime broker is a vital part of how your hedge fund will operate and trade. You must take your time to properly evaluate the benefits of working with the different firms you meet.
Once your hedge fund business is up and running and proven to be effective, your prime broker can be invaluable in making introductions to useful hedge fund industry insiders.
#10 Learn how to convert website users into clients
Your website is one of your most effective marketing tools along with social media - a vital link to potential investors through regular messaging and a perfect way to keep clients up-to-date on the status of your project and build investor relations. It is an essential part of your marketing materials.
You should improve your website to get high search engine optimization (SEO) to increase traffic flow. Any visitor to your site should be considered as a possible lead who can become an investor in your fridge fund. There is nothing hedge fund marketers love more than new potential investors.
To have a chance of converting those visitors to your site, you must have the right marketing materials and conversion tactics in place. You must include lead magnets, opt-in forms, etc., or these visitors will leave never be contactable again.
If you don’t act immediately and capture their information, there is no chance to convert them into a customer.
It is worth using a good digital marketing agency as they can help you get the most from your hedge fund website and get the best results. We at B12 can help you with this, and we will discuss how shortly.
The conversion methods mentioned above will help, but you can also add testimonials and reviews, improve website copy and make navigation of your site easier. These will all help land more leads and give you the opportunity to convert them.
We are B12 and how can we help your business?
We are a company that uses artificial intelligence technologies to automate various processes in business logistics. We are currently developing invoicing software, project management tools, etc.
The core product that we currently offer is a hybrid human and AI web builder where mock-ups are automated with human-assisted artificial intelligence and then completed following the customers’ requirements by a human design team.
It means that you will have an impressive, high tech, SEO optimized website that will fit your needs perfectly.
Our websites are perfect for hedge fund managers, lawyers, real estate agents, asset management firms, etc.
You should be under no illusions, setting up a successful hedge fund is extremely challenging, so every piece of advice you get can help.
Your website will be a vital part of your business, both for attracting potential investors and as a means to keep them informed of your latest process.
We here at B12 hope to have the opportunity to help you by putting a vibrant and effective website together for you. Visit our website for a free website draft right now.
It is time to get your hedge fund up and running!