March 14, 2017

Why Alternative Fund Managers Are Breaking The Silence

[ File # csp0322174, License # 2880573 ] Licensed through http://www.canstockphoto.com in accordance with the End User License Agreement (http://www.canstockphoto.com/legal.php) (c) Can Stock Photo Inc. / HeatherLWithin the private equity and hedge fund community, there remains an impulse to “fly under the radar” to maintain an aura of exclusivity or to keep strategies secret from competitors. But as the industry transforms, executives are realizing that this mantra is outdated and misguided.

Over the past several years, institutional investors have demanded greater openness and transparency from managers—from reporting standards to communication. As a result, we have seen a growing number of private investment firms looking to strategically build their public profiles through marketing and public relations activities. From our vantage point, the catalysts behind this trend include:

Demand for credibility

In the Information Age, what’s one of the first things a potential investor will do before or after a meeting? Google the fund manager.

No matter how comprehensive a pitch deck is, investors run an online search as part of the due diligence process. Having an online brand and strong media program, with proper search engine optimization, not only establishes credibility with a potential investor, but may even generate organic interest from other investor prospects or investment consultants.

 Developing a voice

A proactive, yet controlled, approach to public relations allows a firm to tell its own story. Whether it’s through blogs, investor letters, news announcements, op-eds or commentary in high-profile feature stories, investment managers can provide their firms with a platform to articulate their latest thoughts on the marketplace. The largest managers, such as Carlyle and KKR, even have a Twitter presence. If implemented in the right manner, each of these tactics can help fund managers become go-to trusted sources for industry insights.

Be on the offensive, not the defensive

The irony is that many fund managers claim to deliver alpha through actively managed investment strategies, yet often settle for “passive” media and communications strategies. Such an approach might work, but only until the inevitable media inquiry on a challenging deal, staffing situation or performance metric. Rather than playing defense and scrambling to manage your reputation during an unexpected crisis or after an erroneous story, it’s best to proactively develop a positive media presence to balance any problematic exposure in the future.

Standing out

With the proliferation of fund managers, it’s becoming increasingly difficult for individual managers to stand out from competitors. Having an experienced team and a solid track record is often not enough to get an allocation if you aren’t able to differentiate from the hundreds of other funds in the same alternative asset class. A strong corporate narrative and customized messaging for select media stories and conference appearances can help take business development efforts to the next level. And during a time when fund managers face record level competition to gain the trust and attention of institutional investors, they need need every advantage possible.

 By Shree Dhond, Director at Dukas Linden Public Relations