Alternative Market Briefing

Other Voices: Institutionalizing institutional marketing – what managers should concentrate on for the next stage of marketing

Friday, September 17, 2010

The following piece was authored by Charles E. F. Millard, President of Cardinal Advisors, LLC, based in New York City. Cardinal provides consulting in various areas of financial services, with a particular emphasis on interacting with pensions, institutional investors and governments. Mr. Millard was the Director of the United States Pension Benefit Guaranty Corporation from 2007 to 2009.

Many hedge funds are trying to evolve to the next stage of fund raising – the institutional market. Reliance on High Net Worth channels is expensive in both marketing and account maintenance terms, and individual investors can be fickle and impatient. The institutional market, with its concentration of capital and professional managers, is the ideal target market.

The challenge that many successful funds now face is how to “institutionalize” their capital raising activities. The challenge, as many of them have found, is more than brochure-deep. Yes, a compelling story well presented is essential but the required changes go much deeper than that.

Alternative investment managers must understand the challenges faced by the CIOs and investment professionals to whom they are marketing.

At the beginning of 2009, the hedge fund industry was in disastrous straits. Absolute return strategies had not performed correctly; non-correlated strategies seemed to correlate; and hundreds of investors wanted rapid redemptions – t......................

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