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RECENTLY STARTED A HEDGE FUND?

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RECENTLY STARTED A HEDGE FUND?

  1. 1. November 2017 Helford Capital Partners LLP Helford Capital Partners LLP is authorised and regulated by the Financial Conduct Authority 1 Tony Burke is Head of Marketing and Investors Relations at Helford Capital Partners LLP, based in London UK. Recently started an investment fund? Struggling to get interest from investors? Is everyone too busy to see you? I bet you feed that Roger Daltrey was thinking of you when he wrote these lyrics! Roger Daltrey - ‘It’s A Hard Life’ Lyrics You walk in the streets And people are so blind Won’t give you their penny They just don’t have the time
  2. 2. November 2017 Helford Capital Partners LLP Helford Capital Partners LLP is authorised and regulated by the Financial Conduct Authority 2 Check please! So; your new investment fund has been up and running for quite a few months now. And, as you smile and dial, aiming to reach prospective investors, one of the knock-backs you will often hear is “sorry we are just too busy to see you”. Reality check number one; Asset allocators are busy people. Obviously, when someone has access to ‘investable cash’ then every fund manager wants to know them! And here is reality check number two (and something that you might want to think on); ‘No one is too busy!’ It just depends where, in their importance queue, you sit! All of the professional allocators you approach will have on their desks many, many, other requests for investment from start-up’s, to emerging, and of course, mature managers. And all allocators have a process for their asset allocation decisions. When you do get through to prospects, you will be telling everyone who will listen why they should invest with you. Quite right. And you will be trying every avenue - you ought, as you never know from where the investment might come - from tiny financial advisory firms (where you have a contact at board level), to mega pension funds (where you know someone who knows someone in the investment department, or one of your contacts has opened the door to a fund researcher, or maybe you know one of the pension fund managers). But all you hear from these prospective investors are the standard but oft used phrases “you are too small”, “too new”, “no track record”....blah, blah, blah! So, human nature being what it is; you look to those close to you, who are in the industry, just for that little bit of sym- pathy you feel you need. And when bemoaning of your difficulties in trying to convince investors to buy your new fund, they turn to you and say....”well no one ever got fired for buying an established fund!” So as you mutter through pursed lips...”thanks mate!” feeling like no one understands or cares, do not be discouraged. For actually, your friends are giving you reality check number three; Fund allocators are required to invest other peoples money into proven funds! I was watching a re-run of a recent interview on Bloomberg television this morning with Steve Schwarzman of Black- stone, and he was recounting how, when they started in 1985, they had no investment money....zero AUM, and only $400,000 in operating capital. And now look at them; $400 Billion of AUM and capitalised at around $40 Billion. You’ve got to start somewhere. OK yes, that’s a cliche I know, and it’s easy for me to say, however, it’s also true (and yes I am well aware that when Blackstone was founded in 1985 it was as an M&A boutique, but it has evolved into one of the worlds largest asset managers - primarily Private Equity). There, I bet that story made you feel better, or, maybe not! So; the question you will now be asking is: OK Tony (or ‘smart Alec’) just how do I grow my assets under management quickly? Well, while my response may illicit from you a roll of the eyes and - more - muttering through clenched teeth of “No kidding Sherlock”; I am sorry to tell you, but, unless you have a strategic investor up your sleeve or you have found the much talked about, and what was thought to be mythical, ‘money tree’, I’m afraid it is difficult if not nigh impossi- ble to raise significant assets ‘quickly’ (yes I’m sure I will get a couple of emails from firms who claim to have gone from nothing to a hundred million in AUM within one year, and all accomplished without an institutional seeder or strategic investor, and the fund was not in a very hot sector - i.e. crypto-currencies. If that were so, then believe me, they would be the absolute exception and not the rule).
  3. 3. November 2017 Helford Capital Partners LLP Helford Capital Partners LLP is authorised and regulated by the Financial Conduct Authority 3 Prepare yourself it’s a marathon and not a sprint I am always concerned at the lack of preparedness on the part of - many - start-up managers as to their expectations regarding the scale of assets they think they can raise within their first year. And yet I can guarantee that virtually every new manager I meet will say (to me), “Yes Tony, I know, I understand, I am aware that it takes time, I really do under- stand”. However, very few have actually prepared for just exactly how long it might take. And while their focus and enthusiasm for their strategy’s potential is understandable, my concern stems from my experience in knowing that many will not have the budget to keep going long enough to be able show prospective investors that their strategy will work over the medium term. That is why it’s a marathon and not a sprint. So how can you shorten the time it takes to gain new investment?....Well communicating correctly helps So what do investors want to see from you: Well in order to gain consistent - and significant- investment from professional investors; first you need to build up a track record with your strategy (yes, I hear you again with the ‘No kidding Sherlock’) And while you build your track record, there are only two ways to make sure that you grab the investors attention (and consequently gain consistent - and significant - investment from investors). (1) Make sure your strategy performs, and performs well (2) Be both persistent and informative with ‘all’ of your marketing and communication efforts. With regard to (1) While I shall not make any suggestions as to how you should keep your performance top quartile (or preferably top decile) - it’s your strategy so only you can make it perform - I will however stress that, ‘perform’ it must. Because if it doesn’t, over a timeframe of say, the first two years, then why would - or should - anyone agree to look at starting research on you, let alone invest with you? I am not saying they won’t, I am stressing that you need to be mindful of what you communicate to prospective and current investors, especially when it comes to explaining underperformance (and what you intend to do to put it right). In essence then, you need to make it easy for the investors - specifically through their research process - to understand what you do, why your strategy might suit them, and how you do it. And it will benefit you enormously if you can create and execute a dedicated, efficient and proactive marketing and communications strategy that will keep the investors interested enough to follow your progress. First, a bit of worldly advice: persistence does not equal overly enthusiastic contacting (or bothering) of prospects, especially those who have said that they either want to follow you before making any decisions, or that currently they are not making allocations to your type / style of strategy ‘but will keep you in mind if things change’. It’s great that you are enthusiastic about your strategy, but remember, the prospect might not be in a position to buy (Oh, and if they have told you to go away and never call them again, respect that request. If your performance is fantastic, trust me, they will come to you!).
  4. 4. November 2017 Helford Capital Partners LLP Helford Capital Partners LLP is authorised and regulated by the Financial Conduct Authority 4 When I say you must not bother them, I am not saying you should not update them, but instead urging you to look closely at your methods of executing updates, and exactly what information your marketing materials contain. Do not send out poorly constructed, generic ‘waffle’. Don’t be boring....you are not big enough! I am sure you have noticed that many of the large asset managers put out update information which is often very much the same as their competitors (and so boring as to send the reader to sleep). If you have something pertinent and of interest to tell them - by which I mean of interest to them, and not you - then, tell them. Don’t look upon yourself as a person trying to sell something to someone, but rather as a professional trying to solve your prospective investors perennial problem, that of finding the right manager for their investment allocation. So if a prospective investor has indicated that they wish to follow your performance, make sure that they receive timely updates -via your fund fact sheets - as well as your regular ‘thought’ pieces (but make sure your thoughts are interesting, pertinent, and....thought provoking!). The quicker you can engage your prospects interest - with your genius thoughts naturally! - the more chance you have of creating a two-way communication channel which can only be helpful when the investor looks to make allocations to a strategy such as yours. The Written Word - where to start Write what you might wish to read instead of generic blather (like I said, that’s for the big firms). Excite, your reader, create interest in what you have to say, give the reader a reason to want to learn more about you. And if it suits your style, then be bold in your statements (but never rude). However, be mindful that you must always back up your statements with fact. Today the role of communicating your story has become much more complex amid the cacophony from social networks along with the huge volume of investment products currently looking for investors money. So start off by working to cre- ate: 1. A clear, concise, and transparent story about your strategy and firm. Be honest. Be transparent. Create a conversation about your business. Doing this will allow authentic connections with customers to take place. 2. And make all of your update information inspiring. There is just too much noise in the marketplace for your story to succeed if you can’t inspire your prospective investors. Your aim should be to galvanise them into action. 3. Stay fresh, adapt constantly, and be opinionated. Always be aware of how your brand is perceived in the marketplace, and how it is differentiated. Opinions matter, even if they are controversial. Aim to stay ahead of the trend, and pick the right message to be able to draw from its impact. And always be authentic. 4. Keep it simple when creating and communicating your brands identity and strategy. Imagine how difficult it would be for a client understand your company and product if you - or any of your team - can’t!
  5. 5. November 2017 Helford Capital Partners LLP Helford Capital Partners LLP is authorised and regulated by the Financial Conduct Authority 5 Are you currently contemplating: Launching a fund or investment advisory firm and want cost effective and expert advice? Or have you recently set up a regulated firm, but are now considering ways to keep your costs in check (especially important in your first five years)? If you feel it might be more suitable for you to utilise the ‘hands on’ technical support, ‘extensive’ start-up expertise, and regulatory umbrella provision ‘experience’, from a group who have been in your position, done it more than once, and got the t-shirt!: then give us a call. And if you fancy reading some advice - which is a little more in-depth - regarding starting your own fund or financial marketing and communications, please visit the knowledge centre tab on our website www.helfordcapitalpartners.com for articles such as: So you want to start an investment fund … Go on then, what are you waiting for? Why you should think of outsourcing your marketing and communication effort … ? What do investors look for in a manager … ? So …. is your story captivating … ? Business Growth Stalled? Kickstart your marketing with some tips … Guard Your Clients by Creating Value through Investor Relations … Knowing what your Your Investors want helps … Consulting Services: Solutions developed out of experience, expertise and education … It’s not going to be all blue skies; so how might you prepare for stormy weather … We are based at 97 Jermyn Street, London SW1Y 6JE. Contact us on +44 207 839 5081 or info@helfordcapitalpartners.com
  6. 6. November 2017 Helford Capital Partners LLP Helford Capital Partners LLP is authorised and regulated by the Financial Conduct Authority 6 • Helford Capital Partners LLP is authorised and regulated by the Financial Conduct Authority (FCA). • The information contained in this presentation is proprietary and confidential, and intended solely for the authorised recipient. Under no circumstances may the information be reproduced, distributed or otherwise communicated by the recipent in this or any other form without the prior written permission of Helford Capital Partners LLP. • The distribution of this presentation is restricted to persons who are eligible counterparties, per se professional clients and other such persons to whom it can legally be communicated under financial promotion exemptions contained in the FCA’s Conduct of Business Sourcebook. • The information contained herein is not intended to be nor should it be construed or used as an offer to sell or a solicitation of any offer to buy any security or any financial instrument. • In instances where qualitative judgments are issued, the opinions expressed are thouse of the author. You are urged to draw your own conclusions from the data and analysis presented here and elsewhere. • Certain information may have been provided by third-party sources and although believed to be reliable may not have been independently verified and its accuracy or completeness cannot be guaranteed and should not be relied upon as such. • Any performance information is shown for illustration and discussion purposes only. Past performance is not necessarily indica- tive of future results. No representation is being made that any investor will or is likely to achieve similar results in the future. • The information in this presentation may be modified by Helford Capital Partners LLP without notice. No obligation is under- taken to provide you with any such modifications.

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