Importance of Brand Identity Emphasized in Recent White Paper
There has been a clear trend over the last 12-18 months for hedge funds to focus on a number of operational issues in order to become more attractive to institutional investors. While much of focus has been on the risk management side, I have seen more recent emphasis placed on brand building and image refinement. This can take many forms of course, including making sure that your hedge fund marketing pieces look professional. However, it is becoming evident managers will need to go further and make sure their entire product offering is designed for the needs of their target investors.
In a recent white paper, produced BK Communications Group, this argument was expanded upon and discussed in depth. The following are the overview highlights of the white paper:
- Performance alone isn’t enough to get allocations. Recent surveys of institutional investors find reputation has become a primary consideration when choosing a hedge fund manager. And with institutions now representing up to 70% of hedge fund investors, the demand has increased for high-level communications that speak to a sophisticated audience.
- A step-by-step program to build a strong brand identity – the sum total of associations people have with an organization – can help a fund manager heighten name recognition and credibility. Professional-level materials that reflect the brand identity can position a fund to take advantage of opportunities in the institutional space and beyond.
- A strong brand identity can also help fund managers weather severe setbacks by allowing them to draw on a reservoir of good associations already in place.
- Managers often underestimate the importance of marketing communications, and can be misinformed about what they are allowed to communicate. Many lack the internal resources or capability to effectively build a brand identity and get their message out across a spectrum of materials and media.
While many in the industry understand that performance is not everything, many managers do not believe this (…for some managers, growth is an offshoot of fantastic performance, see David Einhorn, but this is not always the case). I think that this paper presents important information for such managers. As the industry continues to become more instiutionalized, I believe we will see a greater emphasis placed on brandbuilding and I believe consultants will play a larger part in the investment process (including helping the manager to complete the due diligence process).
For the full white paper, please see: BKCG White Paper: Brand Identity for Hedge Funds
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Bart Mallon, Esq. of Cole-Frieman & Mallon LLP runs the Hedge Fund Law Blog. He can be reached directly at 415-868-5345.