Combatting a Battered Image of Hedge Funds
While G20 leaders meet and among other things discuss the global regulation of hedge funds it is important to consider what we as hedge fund professionals can do to help improve the overall image and collective actions of the hedge fund industry. At some point it is in the best interest of everyone within the industry to not only act with the best intentions but to also take it one step further and pro-actively communicate a consistent message of transparency and trust to fellow employees, investors and the general public.
There are concretre things which hedge fund managers can take action on today to help improve their ability to manage their image and their share of the hedge fund industry's image through their investors, press inquiries and the conferences and networking events they attend. A few steps which can be taken could include:
- Creating a Formal Board of Advisors: I have seen some hedge funds grow not because they have hired the most third party marketing firms or spent the most on face-to-face paid introductions but because they sought advice and advisory from a diverse and experienced group of industry professionals. Building a board of advisors of 4-12 professionals with experience in running the portfolio management, marketing and operations of a fund can make the difference between making it to the $100M and $1B marks or staying off the radar of most investors forever.
- Managing Your Public Relations: No, you do not need to spend $12,000 a month on a public relations consultant but at the very least you should speak with other managers on hwo they handle inquiries, speak with your compliance advisor about what you can say and not say and decide as a fund what clear messages you will be trying to send when there are opportunities to speak with the press or at an event or conference. These opportunities are numerous for those who seek them and are ready to execute when the time is right.
- Creating an Ethics Policy: Every fund, from the three person startup to the 300 employee multi-billion dollar funds should have an ethics policy. This policy should be public, followed and principles-based as much possible since new situations arise daily which may not fit a rigid lists of rules and commands.
- Increase or Emphasize Your Skin in the Game: Many investors, press professionals and consultants I speak with often forget that a good number of hedge fund managers have invested within their own portfolios. If you have 70-100% of your net worth or liquid net worth invested within your fund, explain this to your investors it is suprising how seldom this is mentioned within current industry marketing materials. You need to have something to lose if clients lose, in many cases investors want a group which is motivated to quickly cut potential losses and protect the portfolio above all else
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