More Institutional Hedge Fund Investors

More Institutional Investments in Funds

While I believe long-term this may shift back to a more 50/50 split institutional fund investors now make up over 60% of all hedge fund assets, while more retail individual HNW investors make up around 40% of the capital now within hedge funds. Here is the article discussing this development:

Hedge fund managers’ client base has become more institutional than retail over the past year – leading to an “insitutionalisation” of the industry, International Asset Management said.
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In an interview with Global Pensions, the chief executive of the fund of hedge fund firm, Morten Spenner, said around 55% of assets are now managed by institutions - up from about 40% before the crisis.

He said the tilt in assets was triggered by an exodus by retail and high-net-worth clients from the industry post-Madoff, and a need for liquidity.

Spenner said: "Consequently, there will be less appetite for leverage, structured products and Madoff club-type deals."Source

 Tags: Hedge Fund Investors Becoming More Institutional, Institutionalization of hedge funds, hedge fund investors becoming more institutional, institutional level of hedge fund investments

Number of New Hedge Funds Up

Number of New Hedge Fund Launches Increases

The number of new hedge funds is increasing finally and that's great news for the third party marketing industry as more potential clients enter the industry.  With 2,100 hedge funds closed during the credit crisis, few expected a rise in new hedge fund launches this year.  But if new hedge funds continue to launch at this year's pace, the industry may see the first year since 2005 of annual growth in new fund formations.  Hedge funds appear to be back with renewed investor confidence and new and experienced hedge fund managers ready to try it again.  Hedge fund launches have been consistently falling from 2073 in 2005 to 659 last year but this trend appears to be reversing.

It might also be that funds that had posted huge losses closed down so that the managers could start with fresh records, resetting high-water marks so that they can collect performance bonuses without making up the money lost in 2008.

When Hedge Fund Research unveiled its second-quarter data earlier this month, all eyes were focused on the slowing number of hedge fund liquidations. What was little noticed were the hedge fund launches. Since 2005, they have been falling steadily from a peak of 2073 in 2005 to 659 last year. The slide appeared to be continuing in the first quarter when 148 new hedge funds were launched. But, in the second quarter, 182 new hedge funds were launched, just as the equities markets bottomed.

The rising launches are a "constructive development," says Ken Heinz president of Chicago-based Hedge Fund Research. "You are continuing to see risk tolerance and risk appetite improving from the historical lows at the end of 2008. " To be sure, there are still more hedge funds shuttering their doors than opening them, with 292 going out of business in the second quarter alone, according to Hedge Fund Research. But there have been some notable launches.  Source

Tags: hedge funds, new hedge fund launches, hedge fund startups, hedge fund industry, new clients, finding hedge funds, finding new clients, hedge fund startup, hedge funds in 2009

Presuppositions: How to Use a Presupposition

Today we are going to talk about presupposition, this is something from the world of Neural Linguistic Programming (NLP) and it is very applicable to day to day business marketing and sales activities.
Presupposition can be defined as the way of marketing in which you assume that the audience is going to be buying into your ideas. For example we are coming out with a Capital Raising DVD Training program next year which we haven’t named yet, below is a marketing pitch for this using the presupposition approach”

Example:  The Capital Raising DVD product consists of 6 DVDs, a workbook, a cheat sheet, 2 audio CDs and flash cards. After you have purchased the product we will email you your membership details and you may begin using our training materials online. It will then take approximately 6 days to receive your box of training materials in the mail. Once these materials are received you will have the option of using the hard copy materials or the digital copies available online.

Note:  Many times in the paragraph I referred to actions the person “would take,” I did not refer to actions that the person might take or “might take if they decide to purchase.” The importance here is assuming they will be purchasing your product, if you have something truly valuable then you will be speaking directly to individuals who will in fact buy your product. The power of this thinking is that it helps build momentum towards making the sale, it moves them closer to completing the order form.

Warning: If you do not have a good relationship with your list or are you brand new to the industry the over-use of this tactic can come off as cheap and look like hucksterism, use it lightly. Also, this tactic is not a magic bullet which when used means you can ignore standard copywriting, risk removal, product samples, and testimonials. This is one of 20-30 tactics which when all used together raises the response you may receive from traffic on a website or mailings sent to a list.

I hope this post helped, we will be writing many more like this over the next few months.


Tags: Pressuposition, Presuposition, presupposition, How to use presuppositions, copywriting help, how to be a copywriter, copywriting examples, training on copywriting, NLP training, NLP tips

Pay to Play Pension Funds

4 More Firms Settle in Placement Agent Pay to Play Probe

The following comes from our friends at Private Equity Blogger and relates to the use of placement agents to get access to capital from pension funds.  This is a wide-spread practice although private equity funds are primarily being targeted by the investigation in New York.

  The use of placement agents has come under fire following a public investigation into the practice and investigations into whether a pay-to-play scheme is used in attracting capital from pension funds.  The most recent development is that New York Attorney General Anthony Cuomo's investigation into pay-to-play arrangements between the state's pension fund and placement agents for investment funds has forced four more firms to settle.  Reforming the current system has been met with some resistance especially from firms who argue that outlawing the use of placement agents puts smaller and new private equity firms and funds at a significant disadvantage in raising capital.

The four firms are: Access Capital Partners, Falconhead Capital, HM Capital Partners and Levine Leichtman Capital Partners.  Each has agreed to adopt the rules proposed by Mr. Cuomo barring the use of placement agents to attract funding from pension funds.  Additionally, each firm will pay a total $4.5 million in damages.  Carlyle Group and Riverstone Holdings already settled with the Attorney General. 

“With seven firms now having signed our code of conduct, momentum is building in the industry to make our code the national standard to eliminate pay-to-play in public pension funds across the country,” Cuomo said.

Six people have been indicted so far in the scandal at the New York State Common Retirement Fund. Two have pleaded guilty for their role in the scheme which paid kickbacks to a pair of top aides to former New York Comptroller Alan Hevesi, whose office oversees the Common Retirement Fund.

HM Capital and Falconhead both employed a firm run by a key Hevesi aide indicted in the scandal, Hank Morris, while Access and Levine Leichtman unknowingly hired firms that split fees with Morris. Access had hired Barrett Wissman, who has pleaded guilty for his role in the pay-to-play scheme, who in turn allegedly paid off Morris to win the firm business.  Source

Meanwhile, the SEC's proposed guidelines that aim to clean up the pay-to-play system may have a very damaging effect on new and smaller private equity firms.  The current system (ethical, or not) enables small and newly launched private equity firms to net capital from investors that it otherwise probably would not have access to.  The big buyout shops are able to use name recognition and a proven track record to entice investors without the need of placement agents, although some big firms use them anyway.

Without using such agents, small and new funds will have a tougher time raising money, critics say. While large, established firms are well known enough to simply contact a pension fund directly, smaller funds without a brand or history have a far tougher job getting heard.  "I think the proposal's a bit draconian, particularly on banning placement agents," said Steven Kaplan, a professor of finance at the University of Chicago.

Supporters of the placement agent industry -- which includes brand name firms such as Credit Suisse's (CSGN.VX) placement agent unit and Blackstone Group's (BX.N) Park Hill Group -- argue that their role has no similarity with political fixers, and they should not be tarred with the same brush.  Source

Tags: pension fund pay to play, pay to play regulation, hedge fund regulation, pension funds, regulation investment funds, pension funds, anthony cuomo, third party marketing regulation

Hedge Fund One Pager | Tear Sheet Help

Tear Sheets

Hedge Fund One Pager

Whether you design your one pager marketing piece by yourself, hire a designer or work together with a third party marketer you need to make sure that it includes certain elements and characteristics so you will not turn off potential investors. Your one pager is your most important piece of marketing material.

1. Less is more, make sure that your one pager includes some white space and that the font is not too small. Size 8 or 9 font is too small.  Readers will glaze over if your one pager is not easy to read so don't worry about cramming every statistic or detail onto it as you possibly can.  Make it easy to consume and institutional feeling.
   
2. Disclosures: Check with compliance but be careful writing the marketing copy of the one pager in one font and then writing disclosures in a much smaller font. I have never seen a one pager without disclosures.
3. Performance: Include performance since inception, performance year-to-date, performance vs. S & P 500, and performance vs. most appropriate alternative investment benchmark such a Tremont Long/Short Index, etc.
4. Elevator pitch: Place this near the top of your one pager, what exactly makes your fund unique? What is your truly Unique Selling Proposition that will catch the investors attention. This should be defined very carefully and repeated during phone calls, meetings, within marketing materials and through your company emails. You should be able to summarize it within 1-2 sentences.
5. Investment Process: Detail your investment process steps, if possible use symbols or pictures to show the segmented steps of the process to make it easier to understand, at least at a high level.

Access all 10 of our Top 10 One Pager Tips through Hedge Fund Premium.com

This is Bad News: There is NO Magic Bullet

Bad News

The bad news is there is no magic bullet to raising capital. I spoke with at least a dozen managers this past week at our Hedge Fund Premium networking event in Chicago. Most were looking for capital raising help of some type and we discussed many roadblocks that managers are seeing between them and the AUM levels they are trying to achieve.

Our firm provides some capital raising tools, but I believe that daily action and discipline is the best thing that a fund can do to raise capital. They must take responsibility for marketing their fund and have someone reaching out to new investors on a daily basis, if they do not they will forever remain in the bottom 20% of the industry in terms of assets. Very few funds gain their initial assets through a super powerful third party marketing firms, third party marketers like to typically work with managers which have some AUM momentum or foundation underneath them.

To raise capital I believe that managers need to have superior tools and processes when compared to their competitors. This means superior investor cultivation processes in place, superior investor relationships management, superior marketing materials, superior outreach efforts, superior email marketing, and superior focus on investors which actually have the potential of making an investment. Each of those topics mentioned above could be discussed for a whole conference and all of these moving parts need to be in place to compete in today’s industry. While this does not mean you need to out-spend others you do need to strategically plan your marketing campaign.

There is a good quote that I heard which goes something like “If you want to have what others don’t you have to do what others won’t” In other words if you want to grow assets you must put in the extra work, planning, and strategy that others skip over.

Every morning I try to listen to a 45 minute custom MP3 audio session of business lessons, marketing tips and positive thinking notes. One great quote I hear every morning by our friend Brian Tracy, “Successful people dislike to do the same things that unsuccessful people dislike to do, but successful people get them done anyways because that is what they know is the price of success.” This is connected to an interview Brian conducts in which a multi-millionaire says that success is easy, “you must decide exactly what it is you want, and then pay the price to get to that point.”

All of this may sound wishy washy or non-exact but I think it is very important to realize that there is no one single magic bullet for raising capital. It takes hard work, trial and a superior effort on all fronts to stand out from your competition.

- Richard



Tags: Hedge Fund Capital Raising Help, Help With Raising Capital For a New hedge Fund, Emerging Hedge Fund Manger Marketing, Capital Introduction Services for Small Hedge Fund Managers

Investor Pipeline Development

I was making my way through some marketing training materials last night from Mr. Frank Kern and came across a marketing process which may seem somewhat like common sense, but helps to think about to ensure that you are presenting a complete marketing message to your potential fund investors.  Within the marketing training program Kern suggests you follow this process while moving your prospects through different phases of engaging your firm:

1. Interest and Desire:  Provide a white paper, speech, update your perspective of the markets which catches the attention of your potential investor
2. Trust:  Develop a relationship with the potential investor, build trust by providing client quotes, industry recommendations, and comparison analytics between your fund and others.
3. Proof:  Show proof that your fund has a high degree team, detailed consistent investment processes in place, and an advantage of some type which can be tangibly displayed or confirmed.
4. Sample: Allow the investor to start with a small minimum investment, provide examples of what other investors like them have done in the past, or present case studies on three different types of typical investors that you serve so they can imagine then being in that position.

The descriptions next to each bold word above is less important than the process itself. If you can grab the attention of the investor, build a relationship with them, provide proof of your abilities and performance, and then combine that with a sample you will be several steps ahead of much of your competition. 


Tags: Fund Investor Sources, new fund investors, investor pipeline development, investor relationship management, developing a pipeline of investors, investment fund, investments, hedge funds, third party marketing

More Sites

• Perfect Imprints

Capital Raising Methods & Focus

Hello, This is Richard Wilson, below is a paragraph excerpt from a book I am writing on hedge funds, which will be published through Wiley in 2010.  It shares some advice on targeting different types of investors.  While other consultants in the industry charge $250-$400/hr to provide this advice to hedge fund managers I give it away here on my blog for free and soon in my book because my business is based on being a source of genuine education and valuable resources instead of just press releases and news re-runs.

The method by which Tassini Capital Management was raising capital was not effective. In addition to not using an Investor Relationship Management System the team had somewhat randomly been approaching many different types of investors from large European banks to small seed capital providers. The third party marketing firm consulted Chris and Brian Tassini and found that they were both un-willing to part with equity ownership in the management company of the fund in exchange for capital. They also reviewed past notes and confirmed that all efforts to work through institutional investment consultants had been stalled due to sub $100M AUM levels.


The result was a much more focused method of systematically approaching a mix of investors which included 10% institutional investment consultants, 50% wealth management firms, 20% multi-family offices, and 20% high net worth individuals. While institutional investment consultants were not going to invest any time soon they were kept in the mix so that the team could continue to receive valuable institutionalization feedback from the consultants.

Tags: Hedge Fund, Hedge Funds, Alternative Investment Marketing, CTA Marketing, Capital raising methods, hedge fund investors, types of hedge fund investors, how to raise capital from investors or hedge funds

Hedge Fund Sales Careers

Hedge Fund Sales Careers

Below is a short guest post by Mark Goormastic of Goormastic Executive Search. This is straight advice from someone who works daily with placing hedge fund professionals within the industry. The only thing I would personally add to this post is that you must have multiple forms of proof that you have raised capital before in the form of current investor contacts, referrals, or letters of recommendation.

I get a lot of inquiries from sales professionals. The question is usually "I would like to get a salaried Director of Marketing position at a small hedge fund. Can you help?"
Maybe. My clients tend to be small hedge funds with investor assets under $100M. When they are willing to pay a salary, they expect results quickly - within six to nine months at the very most.

To bring in, say $5M, within this time frame your book and career history should look like this, from the perspective of a small hedge fund that might consider hiring you:

- You've successfully raised money for another small (<$100M) hedge fund and were successful. - We'll define "successful" to mean that you brought in a meaningful volume of allocations, let's say $10M, in the first eighteen months. Not commitments. Actual checks in the bank.

- The hedge fund you successfully raised capital for employed a strategy such that the investors who allocated to that fund would logically have an interest in the fund that is considering you.

If those conditions are true then you might be a great fit for a small hedge fund looking for a Director of Marketing.

Tags: Hedge Fund Sales, Hedge Fund Marketing, Hedge Fund, Hedge Funds, Alternative Investment Marketing, Raising Capital for a career, how to become a hedge fund marketer

Chicago Hedge Fund Event

Chicago Hedge Fund Event

Seminar Networking Event: Hedge Fund Premium and the Hedge Fund Group are offering a seminar networking event for hedge fund managers and CTA funds on September 16th, 2009. The event will run from 5PM - 8PM EST in the Blue Room at the W Hotel in Chicago, IL.

At this networking event Bilal Malik from the Malik Law Group and Richard Wilson from the Hedge Fund Group will be speaking on industry regulations and capital raising best practices. The 2 educational talks will last 20 minutes and will be followed by 2 hours of open networking time where fund managers may meet with others in the industry.

Admission is $25 at the door, or free if you are a registered member of Hedge Fund Premium.com. The W Hotel is located at: 172 West Adam Street Chicago, IL 60603 (Please see the RSVP form below for a local area Google Map of the location).

View Larger Map

Pictures: Here are some pictures of where the event will be held:





Tags: Hedge Fund Networking Event in Chicago, Chicago Hedge Fund Event, Hedge Fund Group Networking Events, Hedge Fund Event in Chicago IL, Alternative Investments

Hedge Fund Logo Design & Branding

Hedge Fund Logo

If you are looking to improve the branding for your hedge fund or setup a new hedge fund I would strongly recommend using Design99.com for the work. Here is how it works.

You go to Design99.com and start a new contest for $300, you get dozens if not hundreds of logo proposals from designers all over the world. You provide them feedback as they compete with each other for the $300 payment. If you like one of the logos enough after a week you choose them as the winner and that one designer gets paid $300. It is a very inexpensive way to review dozens of ideas and then pay only for what you like.

I am not an affiliate of Design99, I do not get paid in any way for writing this post. I simply have found this such a valuable resource that I believe this will help many hedge fund managers improve their marketing and branding efforts. Hope this helps.


Tags: Hedge Fund Logo, Investment Logo, Investment Fund Branding, Hedge Fund Branding, Fund Branding, Investment Fund Logos, Financial Logo Design, Hedge Funds

Hedge Fund Lock-Up Periods | Redemptions

Hedge Fund Lock-Up Periods

Interesting story came out in Reuters today about how Cerberus Capital Management is now putting three year lock up periods on all new funds. While investors have been demanding more flexibility and transparency I believe hedge funds are trying to balance liquidity vs. gating clauses. If you are going to have to enact a gating clause to stop assets from leaving a few of your funds you are better off putting a longer 2-5 year lock-up period in place perhaps so at least investors know what they are getting into.

Cerberus Capital Management LP CBS.UL said on Wednesday it will prohibit investors in new hedge funds from withdrawing money for three years.

Earlier on Wednesday, the Financial Times reported Cerberus planned to bar withdrawals in two new funds to prevent the outflows that followed its loss-making acquisitions of carmaker Chrysler and financial services company GMAC.

"The three-year lock-up period will apply to all new hedge funds," Timothy Price, managing director and spokesman for Cerberus, said in a statement to Reuters.

On Tuesday, Cerberus dismissed market speculation that some of its hedge funds were in danger of default. source


Tags: Hedge Fund, Hedge Funds, Long Hedge Fund Lock Up Periods, Hedge Fund Redemption Period, Redemption Periods for Hedge Fund Managers

Certified Hedge Fund Professional (CHP)

Certified Hedge Fund Professional (CHP)

In 2007 the Hedge Fund Group started developing a professional training and certification program for professionals who work with hedge funds. This project began after realizing that all other programs were designed for risk or analyst professionals and none of these fit the learning objectives we had sought.

In 2008 we opened the doors to our hedge fund training and certification program for the first time, we had just under 100 participants. In 2009 so far we have had over 385 participants join the Certified Hedge Fund Professional (CHP) Program, and we expect to close down registration to new members as we reach the 400th new member this month.

Many hedge fund managers have heard about our program and even participated in it, but delivering a clear message about our objectives, structure and team to an industry of over 150,000 professionals can be a challenge. Below is a short summary of the CHP Designation, what participants learn, and how it is being improved:

Mission: The mission of the CHP Designation is to grow our globally recognized training and certification program into the trusted #1 source of educational for hedge fund professionals.

Structure: The CHP Program is split into two levels, much like an M.B.A. program. Level 1 of the CHP program lets you learn about hedge fund fundamentals and basics while Level 2 allows you to specialize within one area of their choice, including Portfolio Analytics, Marketing & Sales or Due Diligence.

Delivery: Participants complete the program by reading the required books, watching our premium video content available through HedgeFundPremium.com (free to CHP members), and using our CHP Study Guide. Participants may also contact our team for career advice, resume editing or networking advice.

Limitations: The CHP Program does not substitute for any licensing or legal registration requirements. The program is limited to an exclusive set of 200 professionals during each of the two sessions which are held each year.

We have spent over 2,000 hours working on this program, improving it, incorporating feedback and adding video content. If you have any feedback as a potential, current or past participant please email us directly at Team@HedgeFundCertification.com.

To learn more please see http://HedgeFundCertification.com




Tags: Hedge Fund Certification, Hedge Fund, Hedge Funds, Hedge Fund Training, CHP Designation, CHP Designation Difficulty, Certified Hedge Fund Professional (CHP)