Hedge fund managers turn to third party marketing

Demand from hedge fund managers for third party marketing and distribution solutions has increased, according to Agecroft Partners, a third party marketeer (TPM).

It said that the TPM industry is experiencing this enhanced interest due to smaller and mid-sized hedge fund managers realising the importance of distribution and marketing via a third party platform.

Smaller hedge fund managers realise that most net flows into the sector is concentrated in a small percentage of firms with the strongest brands, those with assets greater than $5bn from last quarter of 2008 through to 2010.

Don Steinbrugge, managing partner of Agecroft Partners LLC, said: “Beginning in 2011, a small percentage of small and mid-sized hedge funds were able to break away from the crowd by building strong brands, which led them to successfully compete with their larger peers. A high quality product offering and strong historical returns are not enough for smaller mangers to attract capital. They also need to effectively communicate what their differential advantages are in order for investors to have a positive perception of the fund. In addition, they need an effective sales and marketing strategy.”

Agecroft’s research suggests that current market conditions allow TPMs to shine, as there are a significant number of high quality funds that are having difficulty raising assets. Managers are looking for marketing help because they realise that high-quality marketing is a critical element of a hedge fund’s long term survival.

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