Fund Investor Relations

Fund Investor Relations
Fund Investor Relations
Fund Investor Relations
Fund Investor Relations
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Next-Generation Client Management: Leading the Pack with Investor Relations

Transcript of Fund Investor Relations

  • 1.INVESTORRELATIONSFebruary 2011 Next-Generation Client Management: Leading the Pack with Investor Relations By Rich Cockrell, President of The Cockrell Group This paper is the rst in a series examiningbest practices in investor relations inthe context ofhelping fundexecutives gain anadvantage in the current market.There was a time, not so long ago, that fund managers enjoyedCreate and maintain a conversation that with clients thatan effortless in-ow of investor capital. They were able toinstills condence and motivates the current investor toconcentrate on achieving the right mix of investments to introduce prospective investors.deliver the best performance with little need to communicateto investors beyond the standard periodic statement. Ensure that clients understand the fund investment strategy and are able to relay the strategy to their constituents and toThen came the breakdown of the global economy. Weaknessprospective investors.in industrialized countries, a continuing increase in the numberof funds available to investors, and recent investment scandalsIn order to thrive in the current environment, fund managershave altered the fund management landscape. With the ability must work with people as well as numbers. They must changeto transfer funds becoming easier and easier, in this brave newthe value they place on the soft side of the business in order(post-Madoff) world, institutional investors have added trustto retain clients while focusing on future growth. Specically,and credibility to the benchmarks by which they assess funds.they must:Today they are more likely to work with fund managers who Incorporate proven practices in investor relations (IR) intoconnect with them rather than simply going with those whotheir operations.show good performance in their funds. Make the investor relationship a top priority Leverage the right strategies to efciently and effectivelyThese changes present a new set of challenges to fundcommunicate to their investors.managers. In addition to managing fund performance in anincreasingly competitive market, they must:These requirements merit examination in more detail. This white paper begins that examination; subsequent papers in thisRetain current investors despite overall market conditions orseries will delve even further into approaches, practices, andperiods with less than satisfactory manager performance. strategies that will help fund managers implement pack-leading IR initiatives.1

2. INVESTORRELATIONS November 13, 2010Relationships are formed in the presence ofcredibility and trust... When theinvestor trusts that the fund manager ismanaging well... When the investor feels ahigh degree ofpartnership...Making the client relationship a priorityMarkets are conversationsThe Cluetrain ManifestoIts a buyers market. With intense competition for their dollars,the need to be proactive, to reach out, to investors rather thaninstitutional investors are able to call the shots, and they aresit back and maintain a reactive stance. Examples of tactics citeddoing so by demanding more visibility into a funds investmentby corporate IR executives (and that are adaptable to the fundstrategy, risk, and performance, as well more liquidity than wasIR space) include:previously available.Investor education initiatives that share strategic informationAnd fund managers are complying. To successfully compete in about the investment process and about industry trends.the market, they are looking for investor stickiness; that is, they Surveys conducted by a third party that take the pulse ofare looking for approaches and strategies that will motivatecurrent and prospective investors and allow them to provideinvestors to stay with them through good and bad times. Smart input focused on operational improvements.fund managers recognize that stickiness comes with relationship.Incorporating results from these sur veys into investorcommunications and fund positioning.Relationship is formed in the presence of credibility and trust.When the investor believes the information the fund manager isRegularly scheduled one-on-one meetings with institutionalproviding them, stickiness goes up. When the investor trusts that investors (in lieu of contact limited to nancial conferences).the fund manager is managing well, stickiness goes up. When the Non-sales road shows that include analysts and mediainvestor feels a high degree of partnership, stickiness goes up.representatives as well as investors.Best practices for establishing and enhancing investorrelationships are being employed by fund executives. Initially Christopher Locke, Doc Searls, David Weinberger, The Cluetrain Manifesto,2000/2009acquired from corporate IR programs, these practices emphasize Investor Relations Best Practices: Interviews With Executives, SpecialReport #6, Capital Markets Board 2 3. INVESTORRELATIONS November 13, 2010For many Managers, investor letters (orother similar communications) provide theopportunity to communicate in their ownvoice. Accordingly, it may be written in anyform or style that the Manager desires(preferably at least on a quarterly basis)and would generally be expected to includeupdated information on developmentsrelating to the fund Best Practices for the Hedge Fund IndustryLeveraging the right communicationstrategiesInvestor relationship is rooted in high quality communication.technologies for connection will create a rich, well-executedEstablishing a cycle of engaging, informative, plain Englishcycle of messages that serve to cement relationship and attractcommunications is part of an effective communication strategy.new investment.Further, providing information in multiple formats throughmultiple channels enhances the investor experience, which Examples of technologies that fund managers canincreases that all-important stickiness. Communication channels leverage for results include:include: Social media forums that allow two-way dialog. Videos made available to investors and stakeholders online. Written, both electronic (email, website) and printed (letters, Secure web portals that combine communication with onlinereports)transaction capability and document repositories. Social media (secure client-only forums, blog) Live events (one-on-one meetings, road shows, webinars) Webinars that combine real time audio and video for a virtualworkshop or meeting.Frequency and type of communication depends on various Email list services that allow large (non-spam) broadcast offactors. Communicating just to communicate will not build the messages, which can be queued up to go out over a period ofneeded trust, credibility, and relationship. Messages need to be of time.value to prospects and clients, and need to be at a frequencythat will not feel spammy to them. Monthly or bi-monthly As with any other business expense, return on investment mustinsights into the state of the market and the hedge fund be considered. Technology-enabled communication strategyindustry, information about the investor base, and details about needs to include metrics to gauge effectiveness.the funds performance and investment strategy are likely to bewelcome messages in whatever format they are delivered.Technology-enabled communication tools and resources offerfund managers innovative options to reach existing and Mark Report Of The Asset Managers Committee to The Presidents WorkingGroup on Financial Markets, January 15, 2009prospective investors. Leveraging the wide range of available 3 4. INVESTORRELATIONS November 13, 2010AboutThe Cockrell GroupYour management team has a business to run. Most of ourclients do not have the time and resources to handle the critical,day-to-day interactions that most investors often demand. TheCockrell Group is a proactive investor relations rm that canserve as a buffer between fund managers and their sometimesfrequent, or infrequent interactions with the client community. Cockrell Group 1230 Peachtree Street 18th Floor Atlanta, GA 30309 T 404.942.3369 W cockrellgroup.com