HF Third-Party Marketer Sees Rising Interest In Industry

Jun 7 2012 | 12:35pm ET

Interest in hedge fund third-party marketing is growing, says Don Steinbrugge of Agecroft  Partners, a Richmond, Virginia-based third party marketer.

“Three years ago we were contacted by about two hedge funds a week, Steinbrugge told FINalternatives by e-mail, “in 2012 we are averaging approximately eight to 10 a week.”

Steinbrugge says the third-party marketing industry has faced a difficult few years. It was “devastated,” he said in a recent press release, from 2008-2011, as its fee revenue and asset base declined along with the rest of the hedge fund industry. Hedge fund net flows fell off an estimated 95% from their peak and only slow recovered through 2010, and small and mid-sized funds—those most often served by TPMs—were hardest hit.

The industry also suffered from what Steinbrugge calls “a few bad apples”—like those involved in the New York State Common Fund’s “pay to play” scandal in which an official associated with the fund created a TPM to demand payment from alternative investment managers hired by the fund. The incident led to calls for a ban on TPMs, but the eventual result was the State’s less Draconian “pay to play” legislation which Steinbrugge says ultimately worked in favor of “top” third-party marketing firms by “leveling the playing field and making everyone play by the same rules.”

In 2012, says Steinbrugge, small and mid-sized hedge funds have realized that third-party marketers can help them build their “brands” which, in turn, allows them to compete for assets with the large ($5 billion plus) funds.

“A high quality product offering and strong historical returns are not enough for smaller mangers to attract capital,” said Steinbrugge. “They also need to effectively communicate what their differential advantages are in order for investors to have a positive perception of the fund. In addition, they need an effective sales and marketing strategy.”

Steinbrugge says having such a strategy will be especially important now that the JOBS Act has lifted the ban on hedge fund advertising.

 


In Depth

Hedge Fund Veteran Peter Borish Talks Trading

Dec 17 2014 | 9:32am ET

Peter Borish says 2014 was “tricky” from a trading perspective. “The best...

Lifestyle

Cohen Donates $1.5M To GOP Governors Association

Dec 10 2014 | 7:13am ET

The Republican Governors Association raised close to $25 million from October 1...

Guest Contributor

Q&A With Daniel Gallancy: Institutional Interest In Bitcoin Is Growing Steadily

Dec 12 2014 | 7:54am ET

Daniel Gallancy is founder and CEO of SolidX, a provider of total return swaps for...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.