Allocators are getting inundated with emails and pitches from countless funds so standing out and having a voice and brand is no longer optional, but necessary. So how does an asset manager really get notice among the pile of presentations that stack up weekly on an investor’s desk? This insights post will offer some guidelines on how to get started in carving out your own difference in the sea of asset managers and even importantly your competition. 

This insights post is focused on the small to medium fund managers, which we define as those less than USD$500M. It is usually around this level that funds are still endeavoring to self-assess their brand identity in conjunction with navigating the barriers to effectively communicate their competitive edge. There are a lot of nuances that as some funds achieve greater marketing maturity, those earlier adopters at $250M and others around $500M, they recognize a noticeable uptick in interest that is not always tied solely to current assets levels and performance figures.

The majority of fund managers who fit this profile of assets under management are still trying to ‘figure it out’, which ends up costing them long-term. The typical signs of poor brand management by a fund starts with looking at their sales process and results – “how much attention are they getting?”, “how many second and third meetings are being offered?”, “how many deals have they closed?”, and “how many referrals and intros are they receiving?” are all just the tip of the iceberg for what usually indicates a fund manager’s ability or even inability to successfully market their business.

Asset managers at the core are stewards of capital and how you are perceived will have a natural affect on whether or not people want to do business with your company. Your ability to be well perceived by the allocator community decidedly lies within not just your product itself, but the manner in which you market it.

Here are a few pillars in the brand development and marketing process that small to medium funds can start to think about as they create their own fund company’s core identity. There are four major areas that denote how close a fund is to establishing institutional quality brand development and management. The four areas to start assessing to better carve out your marketing journey includes identifying the following: your levels of credibility, external relations, client relations and competitive positioning.

Credibility | What are your levels of credibility? Be honest with yourself.

You do not have to have multiple billions in assets under management to have credibility. While it certainly helps it is not a pre-requisite. This is built around the team and the soundness of the business and then the product. This may sound counterintuitive as funds live and die by the product [read: your fund strategy] as the center of their approach. However, your credibility begins with ‘do investors trust me to manage their money‘ of which my and my team’s background offers key indicators and then secondly if they do business with me, will I be around long enough for the due diligence process and the underlying review period to be worth their time.

Afterwards, once you have “checked” those boxes, now we can look into what it is that you do that is different. Allocators typically have a framework by which they invest. If your credibility is low-grade to say the least the conversations will not progress too far unless someone of notable credibility highly advocates on your behalf.

External Relations | What is the public perception of your business?

The more positively perceived and notable your public recognition is has a direct correlation to the rate in which your fund will grow. This is where a lot of funds are able to expediently surpass their peers of the same asset levels and strategy type. When your fund is more widely regarded even when your performance may be slightly less than your recognized peers, you will ascend at a much faster rate – why? That is because when people are aware of your business, they have a stronger level of comfort in what you do. This can many times translate into yielding potential interest in engaging with your firm. This also ties back into your credibility and other key elements we have discussed before – it is about building inherent trust in your brand and the majority of that aside from the results that you produce stems from your marketing efforts. Additionally, a well-built network of evangelists for your business widens the scope of potential network of investors, even when they are not a direct contact of yours. The referral networks with investors are very strong so it is important to be on the right side of this. It can either work favorably or unfavorably should you have a poor reputation.

Client Relations | Why pre- and post-client development matters?

A fund manager’s ability to not only source prospective investors, but nurture them through to subscription is another area where numerous managers are failing. We have spoken to investors and a common sentiment has been “the manager just stopped following up, so we forget about them”. This is an area that is within your control, yet many managers neglect it resulting in stalled sales cycles.

Your sales efforts should look like any business. This is why many fund managers fail in getting investors engaged. They operate many times only with the mindset of a portfolio manager and not the mindset of a business owner and entrepreneur. This is a prime example of that. They do not approach the sales process strategically and as a result have stagnant AUM. When you do not nurture a prospective investor correctly, it creates a negative perception of how it would be to do business with your fund. This is where a lot of investors drop off in interest from managers. If you really want to do this well, you or a business advisor should set up a scoring methodology to identify the different investors in your pipeline and map out how to appropriately nurture those relationships. Once again to reiterate – investors talk and refer so if one investor had a bad impression, it is not too far-fetched to say that a poor interaction could inhibit your efforts with their network who could in fact allocate to your fund.

Competitive Positioning | Is your fund really as competitive as you think?

In order to competitively position yourself, you need to know who you are competing against. This is very difficult for most funds to accomplish and sometimes will require the assistance of a business advisor or a third party to effectively execute. However, a great place to start is to look at indices for your strategy type or other industry reports relevant to the style of your fund. As you research the market tirelessly, you will begin to see a trend of where you fit in. It is critical to understand where and how you are benchmarked against your competition in order to know if it is really viable for you to even launch an investment management business. Afterwards, your competitive position is an area that should be at the heart of your pitch to investors, but many newer managers on the whole unknowingly fail at this. This is incredibly critical as it will make it easier for them to bucket and rank your fund as they look to consider you as a potential opportunity for their underlying portfolio.

Pro-tip: The three areas where funds think they are more competitive than they realistically are includes: (1) Fee Structures (2) Performance Figures vs. The Sustainability of Those Returns and (3) Investment Process. These three areas – but not the only – are usually where the message gets miscommunicated in attempting to market to prospective investors. Fund managers repeatedly and inadequately offer up details that position them non-competitively, albeit unintentionally, as it relates to these three core areas.

It is clear that some small to medium managers more than others are working vigorously to build their company’s image and are seeing the results distinctively reflected in their capital raising efforts. Naturally, how aggressively you can build a marketing program comes down to your budget. But there are innumerable cost-effective ways today that managers can utilize that reap significant rewards and at the very least begin the process of competitively marketing your fund. It is important to note that in launching and growing an investment management company that building the business is just as important to consider as building out the portfolio. When a manager does not consider both it shows in their pitch and those are usually the managers who feel the greatest pain in stagnant fundraising.