Marketing Your Fund with a One-Pager
In addition to hedge fund pitchbooks, managers will market their hedge funds through one page tearsheets. Hedge fund tearsheets are basically a snapshot of a hedge fund’s performance over time, as of a certain date. There are a growing number of companies out there which will produce tearsheets for managers, but many managers will be able to produce their own tearsheets internally. This article will discuss the common items found in most hedge fund tearsheets and will also provide an example of a tearsheet.
Overview of Tearsheets
Like the pitchbook, the tearsheet contains much of the manager’s contact information, as well as information on the terms of the fund and the fund’s performance. Below are some features which are common to most tearsheets:
Management Company Information – the management company will usually be named on the tearsheet. Usually the address as well the contact information for the firm will also be included.
Fund Information – the name of the fund is typically displayed near the top of the tearsheet. Other fund information usually includes: assets under management (AUM), leverage (not strictly necessary), fees (management and performance), and investment objective/strategy discussion.
Logo – many hedge fund management companies, and sometime the fund itself, will have a logo. In such event the logo is usually incorporated into the tearsheet.
Performance Results – there are a number of charts and graphs which show the fund’s investment returns over a certain period of time. A fund’s metrics are also discussed (alpha, beta, standard deviation, correlation, sharpe ratio, drawdown information, % of up/ down months, etc.). It is common for these returns to be compared to a comparable index and/or to the S&P 500. Performance results are usually shown in a graph figure. Monthly performance figures, growth charts, statistical analysis, risk-return scattergram, and other visual representations of the performance data may also be utilized.
Written Summary/ Discussion (optional) – sometimes managers will choose to provide a written discussion of the fund’s performance results for the period. This can be incorporated into the tearsheet or can be provided to investors as a separate document. Some managers choose to have more frequent tearsheets (e.g. monthly) and less frequently written discussions (e.g. quarterly or yearly).
Legal Disclaimer – a legal disclaimer should be included with all tearsheets. The tearsheets should also be reviewed by an attorney for legal compliance. While many tearsheets do not have the legal disclaimer, we do not recommend this practice as a tearsheet is a manager communication which will need to include the appropriate performance disclosures (see Hedge Fund Performance Reporting).
Optional – naming of the individual fund managers and providing biographical information such managers; including famous quotes, news articles, or quotes from news articles, etc.
Sample Hedge Fund Tearsheet
Our firm has prepared a sample hedge fund tearsheet (forthcoming). [HFLB note: please see the Fairfield Greenwich tearsheets which are great examples of hedge fund tearsheets - please note that these tearsheets have a very long legal disclaimer.]
There are a number of firms which provide tearsheet preparation services. In addition to providing analysis, statistical calculations and graph preparation, these firms help to make the tearsheets aesthetically pleasing. Normally these arrangements are done on a flat fee basis.
Our firm can help you with the preparation of the tearsheets or can provide advice on the look and feel of a tearsheet which you have prepared. Please contact us if you have any questions on this or other hedge fund start up issues. Related articles include: