Exceptional returns and pedigree, while crucial, are no longer sufficient alone to raise capital. As overall hedge fund performance has been lackluster this year, even very high-profile, pedigreed funds with historically strong and solid investment returns have faced significant headwinds attracting and retaining capital. Now more than ever, hedge funds are realizing an intelligent marketing process is mission critical to survive and succeed.
Despite substantial evidence indicating small funds outperform large funds, the one ingredient that most challenges the small hedge fund is capital and without AUM, the greatest asset manager doesn’t have a fund or business. Raising capital requires marketing, which is without the question the most complicated, complex and confusing aspect of operating a hedge fund. The marketing landscape is changing FAST! In the post-Madoff/credit crisis world, hedge fund marketing is hyper-competitive, volatility greater, regulatory intervention dynamic and increased, litigation risk elevated and demands by investors and consultants are more stringent and invasive as reflected by protracted due diligence processes and expanded allocation cycles. Such characteristics have exacerbated industry fears and concerns about safety, resulting in considerable investor attention, resources and analysis directed toward operational risk and the process of executing strategy and decisions, which research demonstrates has great impact on return realization and business performance. Consequently, for a small fund, the ability to raise capital goes beyond investment return and requires an intelligent marketing response comprised of indispensable strategic and tactical components. Strategically, small funds must have a…
By: Bryan K. Johnson Founder and Managing Partner of Johnson & Company.
About Johnson & Company: Johnson & Company is an Austin, Tx-based consultancy, which provides marketing and fundraising advisory services to sub $500 million AUM alternative asset managers. Our service focus and solutions bring the essential strategic insight and tactical resources to small hedge funds, which provide the basis for economical, expedient, effective and efficient marketing and fundraising execution.