Hedge funds have long skipped over glossy marketing techniques in favour of a more traditional approach. But as competition heats up and a new generation of investors step into the ring, isn’t it time to reevaluate? Here are 5 myths of hedge fund marketing debunked to bring your brand up to date.
#1 Hedge Fund Marketing Should Appeal To All Investor Types
If you think hedge fund marketing is all about captivating the interest of all investor types from complete newbies with a low income to savvy experts, you’d be mistaken. You’re not trying to sell chocolate, which could potentially appeal to all ages from any walk of life. Indeed, you must be focussed. Hedge funds are only allowed to pool funds from qualified investors. These tend to be individuals who have made over $200,000 over the past few years or have a net worth exceeding $1 million. Qualified investors are deemed by regulatory bodies such as the SEC to be able to handle the potential risks a wider investment portfolio poses.
Action needed:
Hedge fund investors can be grouped into two large categories: institutional investors and individuals. But there are many investor profiles within each category. Know who you are talking to and segment your marketing if needed. Remember that:
Experienced investors will require more details than novices and that means your content strategy really needs to work hard and not leave any gaps. A fund’s offering memorandum and related materials needs to contain vital information about investing in the fund including: the investment strategies of the fund, where the fund is based, associated risks of the investment and any conflicts of interest that may affect investments.
Investors will also want to know if the fund is using leverage or other speculative investment techniques to try to deliver higher returns. The detail you need to provide should be accurate and well-written with no errors and be part of a well-formulated marketing plan.
#2 Hedge Funds are Regulated the Same Way as Mutual Funds
Nailed marketing for mutual funds? That’s great, but you must still know your stuff when it comes to hedge funds. In short, hedge funds are not regulated in the same way as mutual funds. Unlike mutual funds, they’re not tightly monitored by the US Securities and Exchange Commission (SEC), for example, and can therefore invest in a wider range of securities than mutual funds can.
That said; hedge funds should provide a high level of product transparency to protect the interest of investors. The Asset Manager Code, for instance, outlines both ethical and professional responsibilities of firms that manage assets on behalf of clients. But what parts of the code affects marketing? Well here are the main points. Marketers should:
- Provide timely and accurate information – that means not holding back anything that could influence an investment decision
- Act in a professional manner at all times – that means maintaining your tone of voice and staying true to the ethics of your brand
- Act with independence and objectivity – don’t follow the crowd
MiFID II updates also throw a few extra curve balls into the whole hedge fund marketing concept. Paid research, for example, is under tighter scrutiny. Investment research must be priced separately from other broker services to provide transparency. All records including telephone calls and electronic communications must be maintained for at least 5 years.
#3 Your Brand Will Grow With Your Reputation
True! But how are you going to develop your reputation in the first place? And how will you ensure that your reputation is good and not negative? You really don’t want to be known as a dodgy dealer after all. Content marketing is essential at this point. The following should be on any savvy hedge fun marketing guru’s to-do list:
- Content management
Is your content up to scratch? Does it communicate your message in the right way? With over 15,000 industry competitors it’s important to fight off those looking for a piece of your consumer pie. Remember that content is far more than written web content. It can involve video, testimonials, infographics, charts, quotes and a whole spectrum of other innovative marketing techniques.
- Write an e-book
Producing an e-book takes you from unknown asset manager to authoritative voice. Your e-book should be helpful, full of useful tips and 100% on topic. It must also have a fetching design and be easily accessible. Don’t forget; the average consumer has an attention span less than a goldfish and won’t want to be floating around trying to find links and information.
- Effective PR
Knowing where and when your target audience is active online will allow you to place PR material that will be read and appreciated. High-end investors will be sourcing top information from leading sites. Therefore your PR placements need to be relevant and unique. You also need to battle to get content in top PR spots. To do this, always read the PR rules outlined by publications.
#4 Social Media Does Not Work For Hedge Fund Marketing
Your competitors are on social media platforms such as LinkedIn and Facebook – so why aren’t you? Social media usage has significantly increased over the past five years in the hedge fund industry and therefore it’s really important to be keeping up with trends.
LinkedIn, for example, can enhance a hedge fund’s sales and marketing strategy helping to map out a firm’s organisational structure. It’s also a great way to connect with reputable investors. LinkedIn is a business networking tool that allows you to develop professional relationships and showcase the talents and experience of your hedge fund investment firm. Don’t forget, investors will be screening your company profiles, just as you’re screening theirs. So ensure all your information is relevant, up-to-date and streamlined with all website content.
Social media is also a great way to share articles, blogs and other content that’s relevant to your target audience. The idea of marketing is to engage and attract. Therefore social should form an integral part of your distribution strategy.
#5 Thought Leadership in the Hedge Fund Industry Is Weak
This may be the case on a company-by-company basis, but if you want to be among the best you’ve got to look at effective thought leadership. Agecroft Partners, for instance, has been awarded, for the seventh time in eight years, Hedgeweek’s “global top hedge fund marketing firm” award. This success has been attributed to thought leadership based around extensive market research of hedge fund investors. The company reaches out to more than 2,000 hedge fund investors each month and then creates timely and relevant content such as whitepapers to help address essential issues. Again, LinkedIn is a great place to asset your market knowledge to a target audience.
We specialise in financial services content marketing. Contact the Contentworks team today for content marketing to suit your hedge fund.