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Show the world that you are running not just a stock portfolio, but a fund management business. If you do that, clients will come to you – rather than you having to chase them!
How do you actually make your fund stand out?
It’s a question every aspiring portfolio manager and fund management entrepreneur will have asked themselves. After all, just about everyone in the sector will have demonstrable expertise and a verifiable track record – or at least, claim as much. From the perspective of capital allocators, most products are actually quite similar.
In the old days, you could have pursued the traditional approach of pointing to your personal background. However, not everyone has a personal history that involved a stint at Goldman Sachs. Also, these days the entire concept of “pedigree” comes with distinct problems. The SEC, in particular, but also other financial regulators around the world, have started to pay a lot of attention to any emerging fund manager that leans too much on the pedigree of its founders and portfolio managers. In the past, you could have gotten away with claiming that you “were part of a successful team at Soros Fund Management.” Today, regulators will drill deep into the details of your claims and want to see more specific data of your track record and how you were personally responsible for it.
So, what is the edge that you will use to convince investors to back your fund?
As an emerging manager, nowadays you need to
define in detail what you specialise in and how you want to be perceived
bring to life your value proposition
show that you can be depended upon, including during difficult market periods
Packaging your strategy and backing up your claims is a task that emerging managers need to spend a lot of time on, if they want to be successful and grow beyond the handful of million that most can raise from their friends and family.
Once you have done this homework, how do you make sure it reaches the right audiences?
The way forward is to focus on a channel you can exert control over. Everyone will have at least several of the following five options available to them.
Emerging managers used to be able to get away with just having a landing page, but not anymore. Much more so than in the past, it is really important to think about your website as a key element of how you present yourself to investors.
Allocators will not just look for your website but scrutinise what is on it (and what isn’t).
Consider that nobody has much time anymore. You won’t be able to afford going into meetings with allocators and educate them about the basics of your firm. By the time you get to attend a meeting, allocators need to have looked at your website already so that you can spend the precious face-time on the actual pitch. When visiting your website, allocators will want to get as much foundational information about you as possible. Help them to do so!
Use your website to articulate your investment philosophy.
Explain and illustrate the ethos of the firm.
Show what makes the team tick.
Out of all of this, create one foundational piece of content that pulls it all together.
Think of it as telling the personal story of your portfolio manager and the team that backs up everything with efforts that mostly go on in the background. Show that you are running an actual fund management business, not just a stock portfolio. Most serious allocators are no longer willing to invest in funds that consists of just a portfolio manager and a laptop. They will need to see that you are at least on the path towards building a durable operation.
Critically, invest in an investment grade website. Today, there is no excuse anymore for not having a clean and professional web presence. If you don’t, it will catch up with you and prove a false economy.
Emerging managers cannot afford anymore not to have a solid social media presence. Social media is the platform for merchandising your content and building your brand.
The most likely channel will be LinkedIn, but it may also involve other channels, such as Instagram or more niche channels (e.g., check out Tilman Versch’s Good-Investing.net).
Use your social media presence to get across what you want to be known for, and do so right from the early days. If you don’t, you are wasting valuable opportunities.
There are lots of conferences and events that cater to the needs of emerging fund managers. They fall into different buckets – for example, some are aimed at helping you get started as a fund management business, and others help you to meet allocators and raise funds.
Some of them will be large, others more intimate. The smaller ones often get overlooked, even though it’s often these that deliver the best return on investment for attendees.
It is valuable in itself to have a solid overview of which conferences and events are going on that are relevant to your firm. Being invited to some of them is also valuable. Even some of the best ones are for free, provided the organisers think it’s useful to invite you. Whether you get invited also depends on your website, your social media, and your brand – which is where this all goes full circle.
A few of the best events come with a membership fee, such as the events organised by iConnect. However, these membership fees get you a captive audience. Investing in such memberships can produce a stellar investment return for your emerging fund manager. As one multi-billion hedge fund manager I spoke to in New York recently said: “I have never been to an iConnections event and not raised money.” (And no, we are not affiliate marketers for iConnections.)
Given that no one has time anymore, distilling your website and social media into a PowerPoint-style deck is another must-have tool.
The deck should address the question why anyone should put money into your fund.
It has to ooze your value proposition from each slide.
Getting such a perfect deck is an iterative process and will take time. Once you have a refined version of it, you’ll find it an invaluable tool that feeds into all of the other points mentioned above.
To get noticed as an emerging manager, it helps to regularly produce a bit of intellectual capital.
For the avoidance of doubt, you should NOT produce commentary on what has happened in markets in the last five minutes. Incessant tweeting is not what this is about.
Instead, explain what is happening in the world, and how what your firm does fits into it.
To stand out from the tsunami of content that is produced every day by other players in the field, be deliberate in what you write. Find a white space for yourself. What is the subject where you have a license to lead?
A monthly newsletter probably strikes the right balance between being in contact regularly and not drowning your audience.
Everyone is a little different, and there may be an emerging manager out there for whom incessant tweeting is the right approach. For someone else, the right answer may be to regularly produce a piece about their firm’s unique culture.
In any case, consistently producing such content is a good discipline and will make you many new friends and prospective clients.
What you want to achieve by doing all this, is to create marketing material that is not just fluff.
Tell your personal story and that of your team members. What makes them tick?
Show the world that you are running not just a stock portfolio, but a fund management business.
Get across the characteristics and attributes of your firm, and set the tone for how you want to be seen by the market, the media and everyone else that matters to you.
Take your time to put all of this together, and grow it organically. You will have to define who in your team is involved with these efforts, and how you resource this ongoing organisational work. Do so with an action plan and backed up by regularly analysing metrics.
If you do that, clients will come to you – rather than you having to chase them!
Disclaimer: This blog is intended for informational purposes only. This blog is not intended to invite, induce or encourage any persons to engage in any investment activities and is not a solicitation or an offer to buy or sell any stock, investment product or other financial instruments. If in doubt, please seek financial advice from an independent financial adviser. Sarnia Asset Management is licensed by the Guernsey Financial Services Commission (GFSC). Past performance is not an indication of future returns. Investments carry risk, including the risk that you will not recover the sum that you invested.
By Swen Lorenz
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