It’s no secret that 2011 was a disappointing year for the hedge fund industry in terms of overall performance. Despite that, investor interest in alternative investments remains strong and the industry is not seeing the spike in redemptions that accompanied the 2008 crisis.
Among the developments we covered in 2011, we watched as funds adjusted the buy-in price and targeted family wealth more aggressively. Ray Dalio’s Westport-based Bridgewater Associates, for example, adjusted the buy-in price for their All Weather Portfolio III fund.
Some industry insiders thought it was a bit low, considering the $125 billion hedge fund caters to wide array of institutional clients. But other researchers noted that out of 5,000 single-strategy hedge funds, about 25 percent have minimums of $100,000 or less, according to Josh Charney, Morningstar alternative investments analyst.
There does however seem to be an industry trend among funds to position themselves to reach a larger audience of potential investors. And that means lowering the barriers to entry.
Another big story in 2011 was how Goldman Sachs and other firms are now “seeding” new hedge fund start-ups. Prior to the financial crisis, Goldman and a number of other big banks such as Morgan Stanley and J.P. Morgan Chase & Co. bought hedge funds directly or even set up their own in-house funds. But the financial meltdown hammered returns and resulted in large losses for many of these fledgling funds. Now they’re making bets on hot new hedge fund managers who are launching their own funds.
Speaking of new funds, with more than 10,000 active hedge funds in the marketplace, all but the biggest funds have to do a better job of marketing themselves, said Don Steinbrugge, Chairman of Agecroft Partners, in a guest article for Hedgeco.net. Investors are simply inundated with pitches from hedge funds these days.
Among his suggestions: hire experienced internal salespeople, or a top-tier third party marketing firm. It can have a huge impact on delivering your message and in growing your asset base. These professionals often have the reputation, experience, and even their own branding in the marketplace that can rub off on your firm and significantly increase the possibility of meeting with investors.
What do you think were the biggest hedge fund marketing stories of 2011?