Ban on Third Party Marketers

Third Party Marketing Ban

Lately several state agencies have looked into and taken steps to ban the use of third party marketing firms presenting potential investment managers to them, this is because of the recent controversies surrounding politically connected kickbacks on investments made through these third party organizations. While this is a black mark for the third party marketing industry I do not see this as hurting business at all for the industry, I believe that third party marketing will continue to rapidly grow over the next 5-7 years as firms further evolve and focus more and more on the their competitive advantage which is usually their risk management and portfolio management techniques. Here is an excerpt one of the state agency third party marketing ban cases:

A state agency is banning the use of third-party marketing agents by firms trying to obtain investments from New Mexico’s $11 billion permanent funds.

The State Investment Council also voted Tuesday to ban certain campaign contributions by investment firms that have contracts with the agency. The contribution restrictions will apply to the firms as well as their principals, employees and their family members. source

Here is a public response from a third party marketing association on this matter:

The New York State Common Retirement Fund’s ban on the involvement of marketing intermediaries from the investment manager selection process and New York Attorney General Andrew M. Cuomo’s public pension code of conduct will have the unintended result of making marketing and sales practices less transparent and much more difficult to monitor. The restrictions will also serve to limit the ability of smaller and new firms to market to institutional investors as well as limiting worthwhile investment opportunities for pension funds.

Let us be clear: The Third Party Marketers Association’s members firmly support the concept of a code of conduct that governs the decision-making process of public and private investment plans and that leads to the disclosure of any and all conflicts of interest. What we are against is the widespread banning of third-party marketers, who operate in an ethical and professional manner and according to the rules and regulations now in place. source

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Hedge Fund Asset Inflows

Hedge Fund Inflows

Below is a short article from Bloomberg on the level of hedge fund asset inflows for April, the highest seen in 9 months now:

Hedge funds attracted $15.4 billion in April, the biggest inflow in nine months, as managers had their best performance in more than three years on surging global stock prices, according to Eurekahedge Pte.

Gross inflows to the industry were the largest since August, based on preliminary estimates, according to Ankur Samtaney, an analyst at the Singapore-based research firm. The Eurekahedge Hedge Fund Index, tracking more than 2,000 funds globally, gained 3 percent in April, bringing its year-to-date advance to 3.9 percent, based on 70 percent of the funds reporting, the firm said in a report.

Hedge funds benefited as global stocks surged 11 percent in April, as measured by the MSCI World Index of shares in 23 developed nations. Fund managers are beating global benchmarks in 2009 after suffering the worst year on record in 2008. source



Tags: Hedge Fund Assets, Hedge Fund Inflows, Hedge Fund Asset Increases, hedge funds, hedge fund, alternative investments, hedge fund marketing

Hedge Fund Incubation Services

Hedge Fund Incubation Services

Below please find a short article excerpt on hedge fund incubation and seeding. This resource is being published on Hedge FundStartup Guru.com. Here is the excerpt:

In 2006 if someone suggested that it was a good idea to be seeding and incubating hedge funds, I would have been highly skeptical. Managers who were any good were raising large amounts of capital on their own on day one, mediocre managers were able to start with credible amounts of day one capital and even managers who while talented had no idea how to run an investment management business could get into business. The hedge fund seeder faced insurmountable adverse selection problems.

Hedge fund managers willing to give away either a share in their management company or a share of their fees tended to be of lower quality. You didn't want to be seeding them.

Hedge fund managers of good quality but who understood the business development support role of a seeder and were happy to work with one were labeled as poorer quality and found it difficult to raise capital, so also were from a business perspective, less attractive to a seeder.

Seeding was simply a negative signal to the market all around.

In fact, seeders play an important part in the hedge fund industry. They provide all kinds of support that the fledgling hedge fund manager simply doesn't want to bother with such as infrastructure, business development and marketing, a stable base of capital, corporate governance, risk management and a host of intangibles such as a sounding board for trade or business ideas.

Of course until the adverse selection problem was resolved, none of this really mattered. And well it should be. The adverse selection up until the middle of 2007 was severe.

2008/2009. What's changed? Investors risk appetite has been drastically reduced. The number of new funds starting up is down drastically, the number of fund closures is up drastically. The size of the hedge fund industry has halved in size by assets under management according to several of the usual industry sources such as HFR, Eurekahedge and surveys conducted by the major prime brokers. source

View over a dozen additional resources on starting a hedge fund on Hedge Fund Startup Guru.com.


Tags: Hedge Fund Incubation, Services for small hedge funds, hedge fund startup services, incubating a hedge fund

Family Office Directory Analysis | Contact Family Offices

Family Office Directory

How to choose a directory of family offices:

When selecting a directory or database of family offices to purchase there are 4 points to consider or investigate before making a purchase. By following these tips you will avoid purchasing something built for a different audience, working with information that is largely outdated or receiving data which has not been thoroughly prepared for commercial use with Excel or common CRP systems.

Top 4 Tips for Family Office Directory Selection

1. Length: Many family office directories come with 400 to 1,500 total contacts. In the last year how many firms has your team had time to effectively reach out to? 400? 800? Do you only speak with family offices while marketing your products? While it may be nice to obtain a directory of 1,000+ family offices make sure you don’t pay too much for a database built for a Fortune 500 company instead of a small team of 3-5 marketing and relationship development professionals. Often times just 300-900 contacts may be more than enough to expand your firm’s reach within this industry

2. Statistics Matter: Ask the owner of the family office directory for the percentage of contacts which come with email addresses AND phone numbers. Many databases have poor data quality and only 60-70% of their contacts even list a single email address for the firm. Look for 80-90%+ of listings to have both an email address and phone number for each firm.

3. Price < $1,000: Hiring professionals to efficiently use a database of family office contacts can be expensive; don’t spend more than $1,000 on your directory of family offices. It does take hundreds of hours to build a great product within this space but any firm selling such a product could make you a deal and sell a version of the database to you for $700-$900.

4. Check the Source: Who is providing the database of family offices? It is a firm which naturally speaks with family offices day-to-day? Can the professionals behind the product provide advice on how to approach family offices and HNW wealth management firms? The quality of the organization behind the product can often give you clues as to how valuable their end family office directory product may be. A quick example: The Family Offices Group is a family office networking association of 5,000 plus professionals. Due to their day-to-day contact with family offices and the firm’s history in raising assets from family office investors they know how to create a valuable directory of contact details on firms in the industry.

- Adriana

Adriana Albuquerque is the Managing Director of the Family Offices Group and responsible for developing the associated directory of family offices. To learn more please see FamilyOfficesDatabase.com.

Related To:

• Family Office Directory
• Family Office List

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