Five Tips For Successfully Marketing Your Hedge Fund

Jan 30 2015 | 10:14am ET

By Alan Glatt
Managing Partner
Protocol Capital Management

Money is moving! For the first time in years, this movement has created an enormous opportunity for well-positioned small to mid size alternative managers with differentiated strategies to finally secure their piece of the global allocation pie.
 
The notion of “build it and it will come” is old school and has not been true for some time. While pedigree and performance records are crucial, they no longer speak for themselves and certainly do not correlate with capital commitments.

So what do small- and mid-sized hedge funds need to do to take advance advantage of this season’s rotation of capital?

Following are five tips for creating a successful marketing strategy:

1) Ample investment in marketing early in the process is essential. Unfortunately, marketing has historically been one of the most overlooked and underinvested in factors that can contribute to success or failure of a fund. Don’t skimp on allocating resources from day one.

2) Find the right team: Simply having a marketing team is not enough. Whether marketing is in-house or third party, ensure you perform thorough due diligence before you hire, making sure that the team has integrity, a strong pedigree, a measurable track record, an unwavering work ethic, and industry experience. While a internal marketing person may appear to have an alignment of interests, in fact, a person on your payroll may not provide you with realistic feedback. A third party team—one that benefits from results—will give you honest feedback and  can realistically position your fund within the universe of potential investors.

3) Extend resources beyond capital introduction services: Many emerging funds are relying exclusively on the prime brokerage services of bulge bracket banks to meet potential investors. Cap Intro teams are introducers, yes, but they cannot provide the follow through that is required to attract capital. Work with a person or a team that will follow up on the initial meeting and provide timely, regular updates to potential investors.

4) Stick to your message: Your fund is your brand, and therefore all communication and materials should be focused and reiterate your core principals. There needs to be a common theme shared with all prospective investors at all times or your message will get jumbled, cheapening the desirability of your fund. Make sure your materials are professionally constructed. They should meet the acid test of institution caliber.

5) Commit to the process: Building a successful marketing campaign takes time, capital and commitment. Many managers easily become disillusioned with this arduous process. How committed are you to spend marketing dollars? And how willing are you to sacrifice your own time and measure your ego?  Absolutely ensure that your presence is made during late stage investor meetings. The entire team needs to commit to the process of capital accumulation in a highly structured manner or the prospective allocator will remain the elusive prospect, not an LP.

Alan Glatt is managing partner at Protocol Capital Management. Prior to establishing Protocol Capital Management, Mr. Glatt was a Partner with Alpha Equity Management (“AEM”), an alternative investment firm specializing in quantitative statistical arbitrage and 130/30 strategies. In 2007, Trusco Capital Management, the $75 billion dollar asset management division of SunTrust Bank (“STI”) purchased a significant minority interest in AEM. Subsequently, Mr. Glatt sold his remaining interest in the firm. Mr. Glatt has over 20 years of experience in financial services and began his career with Smith Barney Harris Upham, in the institutional sales area. He subsequently worked as a vice president in the Institutional and Individual Service Group at Donaldson, Lufkin & Jenrette (“DLJ”). In 1991 he joined Morgan Stanley in the Private Client Group and left as a principal of the firm in 2002. In late 2002, he joined Mariner Investment Group, as the President of Mariner Wealth Management.


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