What changes does a hedge fund manager’s IR/marketing function undergo as its client base evolves? As part of our previous Insights report, Winning New Business, we identified the AuM range in which most managers start to evolve their investor base towards institutional capital: $300-999m in AuM. The AuM range before (sub-$300m) was considered the ‘pre-evolution’ stage and the AuM range after ($1bn+) the ‘evolved’ stage. For our final section, we analyse earlier data at these same three stages, seeking trends in the ways IR teams adapt to the influx of new clients.
Going from two staff and a Bloomberg terminal to a multibillion dollar firm with 50 employees or more is no mean feat and the role of marketing and IR staff is essential to that growth and development. But also of importance is where the IR/marketing function sits within and interacts with the wider management firm. What proportion of staffing does it account for and how does this evolve over time? These considerations and more are covered in section two.
Our third section will look at compensation for IR and marketing professionals and the skills necessary to earn top dollar. Of course, the industry’s top earners are not necessarily its top talents, with so much hinging on where the individual is working and the setup of which they are a part. The region, strategy, reputation and size of the manager are all factors explored in the analysis, and, beyond that, managers – and investors – offer a flavour of the skillset they expect of new IRs.
Investor expectations have changed, competition is fierce, and regulation continues to give IR professionals pause. As a result, it has never been more important for a hedge fund manager to consider carefully the structure of its IR and marketing function. How, when and to what formulation should a manager structure its IR team? When is it better to favour a division by investor region over investor type? HFM will seek to address these questions and more in this report’s opening section.
So much can go wrong after identifying an interested investor and yet so much is out of the investor relations team’s control. Investors’ needs change, economic forces hit performance, senior management disrupts plans. But the fault is not always in our stars. Exploring manager actions and investor preferences, this section offers insights on some of the elements of marketing managers can and cannot control, with an eye on maximising the chance of converting interest into business.
All managers aspire to have a diverse investor mix, filled with the ‘best’ kinds of investor. But at what stage do managers take serious action to achieve this aim and which strategies do they employ? Investor base evolution is a topic that managers seldom discuss with their clients and is more widespread than many investors, and indeed managers, might suspect. Our final section explores this process, the extent of its implementation and the techniques used in doing so.