The Hedge Fund Marketing Power Index

May 17, 2017  

Good marketing is more than a strong Rolodex.

Now more than ever, good marketing is key to a hedge fund's survival. With investor allocations stagnant, only the best can keep their funds from failing.

For the first time, Alpha is laying a framework to mathematically rank the hedge funds with the best fundraising teams — the marketing professionals able to rake in capital under even the worst of circumstances.

Over a period that could arguably fall into that category — including a year that saw hedge fund investors redeem more than they invested for the first time since 2009 — these are the managers that were the best at overcoming the odds. Our quantitative formula was developed in partnership with Context Jensen Partners, a global corporate advisory and executive search firm that recruits capital-raising talent for alternative investment managers. It takes into account both total assets raised and the level of difficulty in raising them between January 2015 and January 2017, using statistics from Preqin's hedge fund database. (Only hedge fund firms that were included in the Preqin data were considered for the inaugural ranking.) As Sasha Jensen, the recruitment firm's CEO, explains, "A fund with high performance is much easier to raise assets for than a fund with worse performance." To even the playing field, we gave underperforming funds more points for new commitments.

"Our goal in developing this index was to bring a more rigorous, quantitative approach to the evaluation of marketers," Jensen says. "Coming into it we knew that any formulaic approach to evaluating marketers would ignore many of the critical factors that make a firm successful at capital raising; any formula would necessarily be flawed through underrepresenting or ignoring these soft factors."

These qualitative factors, including brand value and product innovation, are often the driving force behind a marketing team's success — but are much more difficult to measure. This index, instead, focuses only on the outcomes, making it possible to stick to cold, hard data.

"Our hope was that by staking our flag in the ground with this formula, we would provide a starting point for a serious discussion of how best to measure effective marketing and therefore provide a basis for a more rigorous analysis of the factors most critical to this success," Jensen says.

New York–based commodities hedge fund Quest Partners is the inaugural champion after a year that saw investors pour money into CTAs even as other hedge fund strategies suffered outflows. Bridgewater Associates, which over the past two years underwent multiple leadership shakeups and a sexual harassment claim, ranked 58th, and PIMCO, which spent all of 2016 in a legal battle with its departed co-founder Bill Gross, still managed a spot in the top 100 for its hedge fund practice.

Although Jensen says there's no one-size-fits-all approach to good marketing, the firms that ranked the highest on this list have in common a thoughtful, long-term marketing strategy that encompasses fundraising targets, product development, client coverage, client service, compensation structures, and talent development.

"Good marketing is more than just a strong Rolodex or the wanton amassing of as many assets as possible," Jensen says. "Over the past ten years, and especially more recently, we've witnessed firsthand the importance of such good marketing in the hedge fund industry. A firm cannot survive without the support of its investors. Individuals and teams that can cultivate and maintain these critical relationships are often the difference between growth and stagnation or closure."

Presented by Institutional Investor's Alpha & Context Jensen Partners.

 
Hedge Fund Marketing Index — Top 25
  Firm CJP Power
Index
    Firm CJP Power
Index
1 Quest Partners 181.3 14 400 Capital Management 107.2
2 QMS Capital Management 140.9 15 Sherborne Investors Management 106.9
3 ROW Asset Management 135.1 16 Kaiser Trading Group 106.0
4 International Standard Asset Management 130.7 17 Capital Fund Management 105.6
5 Argentiére Capital 129.0 18 Phoenix Investment Adviser 105.0
6 Von Preussen-Hohenberg Management 127.8 19 Muzinich & Co. 103.9
7 R.G. Niederhoffer Capital Management 116.1 20 Owl Creek Asset Management 103.3
8 AQR Australia 114.5 21 Kayne Anderson Capital Advisors 102.8
9 FORT 111.6 22 Spinnaker Capital Group 102.6
10 Horseman Capital Management 109.9 23 Value Partners 102.2
11 Parus Finance (UK) 109.7 24 GMT Capital Corp. 102.1
12 First Private Investment Management 108.1 25 Select Equity Group 101.8
13 Whitebox Advisors LLC 107.9  
Click to view the full Hedge Fund Marketing Index

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