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Over a decade ago, Pensions & Investments, writing about how to get buy-in from institutional investors, surveyed international institutional investors and offered the key observation that managers will increasingly be differentiated by their strong belief systems and a rigorous investment process that matches those beliefs. P&I reported that it is very important for managers to base investment decisions on a clear set of investment beliefs. The whole logic of their business is premised on being able to articulate beliefs, testing beliefs and being able to revise beliefs in a very uncertain world, readers were told.
I was reminded recently of that phrase — in a very uncertain world — as institutional investors, and all of us, find ourselves in a new, very uncertain world indeed.
What it means for hedge fund marketing
Asset raising for hedge funds has become more competitive over the years.
Successful capital raising has always required having more than just performance that is within the ballpark of acceptance. Having institutional caliber operations and administration went from being a marketing differentiator to simply an expected cost of doing business. Along the way, from pre-crash to post-crash markets, the term transparency, and the call for it, changed in meaning. What began as calls for data — reveal the portfolio holdings and provide third-party reporting — morphed into a call for providing more explanation about the investment process and decision-making behind a firm’s strategy.
Institutional investors and their investment consultants have become more demanding for greater information detail about how hedge fund managers think and how they construct and manage their portfolios.
Is your firm communicating an institutional caliber explanation about its investment beliefs and the process behind its strategy? A few bullet points in a flip chart are not sufficient for accomplishing this. You cannot just claim you have a rigorous investment process and leave it at that. You have to prove it with a detailed explanation of this important subjective information that your hedge fund has to persuade people to understand and buy into: how it invests.
Reexamine your own communications. Are you truly differentiating your firm from the competition or are your marketing collateral, in-person presentations and responses to essay questions in RFPs and DDQs actually having you come across as a me-too copycat strategy-wise, offering no perceivable added value?
Have you given prospective investors easy access to a full, written explanation about your firm’s investment beliefs and investment process? Your hedge fund has a communications marketing risk management challenge. One of the important selling missions you have is to reduce the odds that a prospect will mess up retelling the subjective-based part of your firm’s story to others on the investment committee. Supplying them with the written long version story of investment beliefs and investment process will increase your control in how your prospect remembers and retells your story to other decision makers.
A flip chart pitchbook is not the right tool for this communications job. An additional marketing document that delivers this vital story in sentence and paragraph form about how your firm thinks is required. Such content is more suited to brochure format marketing collateral than to bullet point flip charts. If such a marketing tool is not already in your selling arsenal for making selecting your offering a more defensible decision in the minds of your prospects, creating this type of document should be at the top of your communications marketing To Do list.
The job of crafting the story of a hedge fund’s investment belief system and its investment process isn’t an assignment a portfolio manager can pass off to others to create with little or no participation from him. Too often, important parts of a hedge fund’s investment process story have never been fully communicated to people outside the firm. Also, many hedge fund firms find themselves unable to tell their investment beliefs and process story the same way twice. So, the portfolio manager’s participation with his communications marketing experts in locking down his firm’s storyline is vital.
Differentiate your hedge fund based on your investment beliefs and a demonstrable, rigorous investment process that matches those beliefs. This will show your active portfolio management is not ignoring conditions in today’s very uncertain world and improve your firm’s ability to out-market competitors and convert prospects to clients.
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© 2025 Frumerman & Nemeth Inc.
Bruce Frumerman is CEO of Frumerman & Nemeth Inc., a 37-year-old financial communications and sales marketing consultancy that helps financial services firms create brand identities for their organizations and develop and implement effective new marketing strategies and programs. Frumerman & Nemeth’s work has helped money management firm clients attract over $7 billion in new assets, yet they are not third-party marketers.
Frumerman & Nemeth is internationally recognized for its work in crafting for clients the beyond-the-numbers story of how they invest — content that investment committees actually discuss, debate and vote on behind closed doors when considering firms on a short list for potential investment. Importantly, this is required due diligence content that cannot be communicated in pitchbook format.
Frumerman & Nemeth’s work also includes providing strategic consulting on product and strategy-specific branding, crafting the required strategy-specific content detail and designing and producing the marketing tools needed to make it through the two-month to two-year institutional selling cycle. Clients also employ Frumerman & Nemeth to help promote the intellectual acumen of management — helping them get speaking opportunities, write and give speeches as panelists or stand-alone speakers at industry conferences, and through media relations marketing services.
Mr. Frumerman can be reached at info@frumerman.com, or by visiting www.frumerman.com.