Hey Hedge Funds, Are You Recognizing the Full Value of Investor Relations?
In the midst of ever increasing industry regulation and investor demand for more transparency, investor relations has become one of the most important departments within a hedge fund firm, especially during capital raising periods. Developing a set of IR best practices has become an essential component of a hedge fund’s overall corporate strategy, often allowing even sub performing funds to improve asset retention relative to better performing competitors.
The FINalternatives’ article, Survey Says Good IR Trumps Performance in Fundraising, demonstrates this increasing trend. The Chestnut Advisory Group, a consulting firm providing comprehensive investor relations programs, reviewed 931 asset managers’ investment performance and asset flows and surveyed institutional investors controlling $429 billion in capital. The survey results showed that 92% of respondents believe that IR is an essential element to a hedge fund’s overall mission. Interestingly enough, “investment results” ranked only 6th in importance, falling below factors such as “understanding the firm’s investment process” and “clear and consistent communications.”
Keeping in mind the importance of IR best practices reflected in this survey, we’ve developed a list of the top 5 best practices you can implement to enhance your investor relations program and discuss how our products can assist you with each:
1. Communication is the foundation of any successful relationship
Regular and clear communication is essential for building long-lasting positive relationships with your investors and converting prospects into clients. Share market insights, website updates, monthly statements or even a portfolio manager’s recent interview with Bloomberg. Investors and prospects value this transparency and will appreciate knowing about company news and events.
Imagineer Tips:
WebVision’s Auto-Notify Add-in has the ability to scan your website for newly posted information and automatically send an email notification to those contacts permissioned to view the corresponding website updates. This creates more efficient and effective communication with your investors while increasing secure traffic to your website.
By utilizing both Clienteer’s group and group email features, you can create targeted distribution lists to effectively communicate information about specific funds to investors, prospects and other interested parties. Using this functionality, you are able to efficiently send personalized email updates such as monthly estimates, market commentaries or even quarterly statements.
2. Categorize investors and prospects, promoting internal communication
By organizing your investor and prospect lists by meaningful characteristics like client birthdays, type of investor, geographic regions, fund/class invested in or by client AUM, your entire firm can better communicate specific information to not only each other, but also to relevant contacts. Technology ranging from Microsoft Excel to industry specialized CRMs is available to help IR teams streamline this process. While the advantages of tailoring your communications are obvious, trying to maintain all the relevant filters in Outlook or Excel spreadsheets can eventually drive you bananas and tends to discourage any efforts to tailor your communications to a targeted audience. Industry specialized CRM solutions make it a snap to categorize and communicate with interested parties in an efficient manner with minimal effort.
Imagineer Tip
Clienteer and WebVision both allow you to create granular user roles to determine each contact’s level of account access, which is great for compliance purposes. When this functionality is implemented, your IR team can effortlessly send quarterly statements for each fund, for example, and only those contacts who are permissioned to access the quarterly statement will receive the document.
During capital raising periods, Clienteer’s pipeline management screen allows your sales and marketing team to easily track prospects and investment pipelines in a customizable grid with the ability quickly query, categorize, or rank them. Create automated milestones for every prospect in order to effectively manage your sales team’s conversion of prospects into clients.
3. Don’t be afraid to share the good AND the bad
No one likes hearing bad news, but it will be even worse if your investors hear it from someone other than you. Highlighting trends and news that are both positive and negative will both improve the trust factor between your firm and interested parties as well as give your clients and prospects a more realistic perspective on market factors and their investment’s projected return.
Imagineer Tip
The WebVision platform helps keep your investors, prospects and other interested parties updated with market commentary, strategic perspective and each fund’s projected return. If you have the auto-notify add-in setup, this updated information will automatically be emailed to those permissioned to access a specific update.
4. Maintain an open dialogue
The best way to hone your IR team’s practices is through speaking with current investors and asking for honest feedback. Send a survey around or ask candidly over a business dinner. Are we being responsive to your needs as an investor? Are we communicating in the right way? Are our reports delivered in a timely manner? Do they have the proper level of investment detail and market commentary? Are we providing enough information on our portfolio strategies and disclosing the right metrics? The answers to these questions will provide your team with the insights necessary to enhance their IR strategy.
Imagineer tip
Maintaining groups in Clienteer based on fund and account user roles, coupled with the software’s group email functionality, allows your IR team to easily send targeted open-ended survey questions to investors. The survey responses will provide them the necessary feedback needed to improve their IR practices.
5. Educate your investors
Your investors are entrusting your firm with a significant amount of capital in the hopes of positive portfolio growth over time. Educating them on market trends through newsletters and webinars is a great way to maintain this level of trust and increase industry knowledge and awareness.
Imagineer tip
Using WebVision’s Event Management platform, you can easily create and manage events like webinars, audio casts, conference calls or meetings, educating your investors, prospects and other interested parties about investment activity, a fund’s strategic perspective or any other useful market insights.
