Growing Your Investment Management Business
Many hedge fund managers after a good start, find it difficult to significantly grow their business. It is quite useful in those circumstances to engage with an independent party to have a review of all operations of the firm. We can review in an discrete manner the following:
Marketing Materials – As an investment management firm with a few years in business, marketing materials have probably gone through many versions. Quite often it becomes ever more crowded and a clear message starts getting lost. A five-second test fails with many. In addition, how the “story” is told, how the actual activities take place and what is written down seem to divert, which potential investors often pick-up on. A fresh set of eyes to review, whether presentations, newsletters, website, social media are cohesive and compelling can have a significant impact, especially as third parties are reluctant to give feedback.
Marketing Operations – Other than the actual materials, the efficiency of the marketing team may at times be sub-optimal. This may be as a result of partners giving less clear directions, and over time, changes in the marketing team. Part of the review may be how best to set fee structures, fee discounts, share classes. A fresh review may be of great benefit.
Operations & Compliance – As the business grows and more separate funds are managed, more service providers and counter-parties are being utilised, operations and systems may also become stretched, while the compliance functions must grow in importance too. A comprehensive independent due diligence review, prior to those undertaken by large potential investors, is one simple starting method to relatively quickly highlight some of the potential problems.
Financial Review – Fee structuring is one method to enhance profitability, as will be managing fee rebates. The largest cost item however will always be staff and partner compensation. We can advice on fixed and variable compensation structures, to retain and motivate staff, as well as indicate what tax structuring could be reviewed with third parties. However, a review of the overall cost structure may be helpful as well to review where to invest in order to gain more AUM.
Portfolio Return Analysis – We list this lastly, as we assume that most / many hedge fund managers will have comprehensive systems to analyse where / how portfolio returns were generated. However, this is not always the case, as portfolio managers are rightly forward looking. In the case, where the CIO is not daily involved in all portfolios it may be helpful to analyse, where / how portfolio returns / alpha is being generated. Even on a basic level, on risk adjusted outperformance (“alpha”?) on the long side versus on the short side, large-caps v mid-caps, which markets etc.
Please contact us should you wish to discuss how we could undertake such a review by emailing firstname.lastname@example.org or call on +44 207 6920036 or +44 7799 415788