|| The Managed Funds Association's D. Brooke
Even though the Securities and Exchange Commission recently
lifted the 80-year-old ban on general solicitation for hedge
funds, don't expect to see late-night infomercials or
billboards at sporting events advertising the industry's latest
investment opportunity anytime soon.
The impact of the new rules is likely to manifest itself in
a less sensational, yet more meaningful way for investors. By
lifting the ban on general solicitation, Congress and the SEC
have opened the door to greater transparency and information
sharing between funds and those qualified to invest with
This welcome, overdue change will usher in a new
communications landscape where managers may need to rethink
their approach to marketing and building a brand. Some, for
sure, will continue to do business as they always have. Other
managers are likely to embrace the change and engage
appropriately in the ongoing public conversation about
Many believe that the first to embrace the new rules will be
large, diversified financial services firms like Blackstone
Group or BlackRock and smaller start-ups trying to raise
capital. One thing is certain: A very competitive industry is
about to get even more competitive, with more funds using a
broader range of tactics to attract investors from a limited
qualified investor pool.
Within the context of this new post-JOBS Act landscape,
hedge fund managers may want to explore four key issues: brand,
media relations, events and speaking engagements, and digital
and social media.
Brand: To a numbers-driven hedge fund
manager, the idea of building a brand can seem irrelevant. But
a strong brand is the foundation of a business with staying
power. Building a strong brand requires a company to know and
consistently communicate what it stands for, what
differentiates it from competitors and what unique value it
provides its investors.
Media relations: For decades fund managers
avoided the press to ensure they wouldn't run afoul of the
general solicitation ban. Now managers and funds need to
rethink their posture toward the media. With the ban lifted,
funds can engage in a more proactive media strategy. Equally
important, funds can now push back against inaccurate reporting
and aggressively correct the public record. This new landscape
will make it more important than ever to build meaningful
relationships with those who cover the industry.
Events and speaking engagements: Industry
conferences and events have always provided an important
platform for fund managers to communicate important ideas about
their investment strategies. Now they can think more
expansively about a public speaking strategy --including venues
outside the industry cocoon -- to demonstrate leadership on a
Digital and social media: Once upon a time,
paid media was the only way a brand could exert total control
over its messaging. A brand's "owned media" properties -- its
website, Twitter handle, YouTube channel -- now provide new
platforms for communicating a brand's value proposition and
engaging target audiences. Fund managers need to think
carefully and strategically about how access to these new
platforms can benefit their businesses and provide information
to investors and potential investors. Effective management of
digital and social media will also allow funds to manage their
online reputations. After all, the most basic step in the due
diligence process is a Google search.
While some pundits and consumer advocates have positioned
the lifting of the general solicitation ban as an opening for
potential fraudsters, responsible hedge fund managers will see
the move for what it truly is: an opportunity for greater
transparency and providing more accurate and timely information
We are entering a new era where funds of all sizes will
compete for investors on a level communications playing field.
Managers must now invest the same quality of planning and
analysis in their marketing and communication strategies as in
their investment strategies.
The ability to generate stronger performance on a
risk-adjusted basis will always trump a slick marketing
brochure. But a strong brand and a smart communications
strategy are important cornerstones for an investment company
or fund with staying power.
D. Brooke Harlow is executive vice president and
managing director, development and communications, of the
Managed Funds Association, the trade association representing
the global alternative investment community.