Survey of Hedge Fund Investors

Hedge Fund Survey

Hedge Fund Survey of Investors

Preqin recently completed a survey while looked at the current investor confidence in hedge funds, demand for hedge funds from investors right now, and quality of information or transparency found within hedge funds today. Here are some interesting statistics:

There are more investors which are more confident in hedge funds now than there are investors that are less confident since the financial crisis began
Only 7% of investors are going to stop investing in hedge funds
Over 25% of hedge fund investors will increase their investments into hedge funds
Increased transparency and a fundamental understanding of the hedge fund's strategy have been rated as the most important change since the financial crisis began while risk management methods note as the least important change that should be made

Below please find charts and graphs from the Preqin newsletter, click on them to view a larger version.

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Hedge Fund Marketing Statistics | Third Party Marketers

Hedge Fund Marketers

Hedge Fund Marketing Statistics

My background is in capital raising and third party marketing.

Some interesting statistics on hedge fund third party marketing firms came out of the recently released 2009 Preqin Global Hedge Fund Investor Book. These include:

Over 80% of all third party marketing firms having their home office based within the United States
Canada had double the number of third party marketers as London (8 and 4% respectively)
While Hong Kong only holds around 1% market share within the third party marketing industry I expect that Asian based third party marketers will grow to 5-8% of the industry over the next 5 years.
A total of 21% of all third party marketing firms are based in New York, keeping close to both institutional investors , service provider partners and potential hedge fund clients.
17% of all third party marketing firms have more than one office location
Of those firms with more than one office location 52% of all third party marketing firms based in the United States have at least one “international office”

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Hedge Fund Pitch Book | Marketing Materials

Hedge Fund Pitch Book

Hedge Fund Marketing Materials Tips

Below is a list of my top 10 tips to those professionals who are looking to create a pitch book for their hedge fund. My advise to both $30M and $1M hedge funds is that you can never start this process early enough, it is an iterative constantly evolving project which will never be complete. Here are the top 10 tips for creating your hedge fund marketing materials.

Think long-term. Invest in creating a robust institutional quality pitch book the first time around and complete 5 drafts of it internally before showing it to a single investor.
Stress your team, investment process and risk management controls and how they all interact inside the operations of your hedge fund.
Make your competitive advantage clear and do not rely upon canned phrases such as “positive returns within bull or bear markets” anyone who reviews hedge fund materials for a living see these by the hour. Your advantage must be unique.
Stress the importance and individual functions of your team, your experiences and pedigree. This should be the foundation upon which everything else is built.
Do not send any pitchbook or marketing material out before speaking with a qualified compliance or legal counsel on your team.
Create a one page marketing sheet, full 13-20+ page PowerPoint presentation and one page newsletter which would be released monthly providing your view of the markets within your niche area of expertise.
Work with high caliber service providers so that you don’t bring extra skepticism upon a relatively new fund which may already be scrutinized by potential investors and advisors.
Use your whole team and prime brokerage business partners and other service providers to improve your marketing materials. Professionals who work in prime brokerage or administration see many types of marketing materials and can help provide valuable feedback at no additional cost to your fund.
Do not create a PowerPoint presentation that is longer than 30 pages. There are some institutional money managers who run 3 similar funds and will sometimes cover each of these within a single presentation, but this is the exception. 95% of the people who you will send the PowerPoint presentation to will not ready more than 15 pages of the material unless you are walking them through it over the phone or in person.
Purchase the rights to graphics, choose a unique, simple and professional layout for the presentation and use the new Windows Vista diagramming tools to create institutional quality presentation. Coming into a meeting with a word document or 25 pages of bullet points is not very effective. It is hard enough to catch an investors’ attention and bring them to the table to discuss your fund, you don’t want to lose them due to the aesthetics of your PowerPoint.

To view over 100 additional articles related to hedge fund marketing and sales please browse our Hedge Fund Marketing & Sales Library.

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Third Party Marketing Q & A Interview

3PM Industry

Third Party Marketing Q & A Interview

The following is part of a Q & A session which Preqin had with a US based third party marketer, this full Q & A session could be found within the 2009 Preqin Global Hedge Fund Investor Database:

Question: What do you see as the primary role of a third party marketer and what are their man advantages:

Answer: Third party marketers provide important services before the start of a marketing campaign that are sometimes overlooked. To prepare for a fund raise, services include providing strategic advice on fund structure and terms, preparing to properly position and differentiate the fund versus its peers, in addition to enhancing the fund’s marketing materials. Once the stage is set to begin speaking with investors, the third party marketer should make educated introductions to investors that are well-suited for the fund and then assist interested investors through their due diligence process. Running an organized and efficient process to track investor activity and follow-up is alo an important component of third party marketer’s service.

The real advantage involves leveraging the strength of a third party marketers brand to get the proper attention of investors with whom they have longstanding, established relationships. Most investors, particularly institutions, do not have the resources to evaluate the hundreds of funds that float across their desk in a given month: they are forced to pass on many potentially appealing funds because they don’t have the time to thoroughly review each fund and conduct due diligence. Value is added to both the hedge fund manager and the investor when a fund is brought to the investor’s attention by a marketer that is known and trusted by the investor, who has properly packaged the fund and conducted thorough due diligence. This focused outsourcing of the marketing process allows the hedge fund manager to spend most of their time and attention where it should be: managing the portfolio on behalf of their investors.

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Survey of Hedge Fund Investors

Hedge Fund Survey