By Zach Kouwe

I recently stumbled upon a new survey of what institutional investors look for in their hedge fund managers. The survey, from fund administrator SEI, was particularly interesting because it covered what investors think about a particular firm’s “brand” identity and how that factors into their decision to invest in the fund.

Not surprisingly, the results were mixed with many investors seemingly confused by the question. But from investors and consultants we've spoken to, having a solid and understandable brand in the market matters whether they admit it or not. From the survey:


When we asked institutional investors to define “brand,” their answers diverged. Respondents were similarly torn on the importance of brand; one-third said it makes no difference in their selection of hedge funds, one-third disagree, and one-third are neutral. 

A hedge fund needs to able to describe its unique investment process in an understandable and concise way both to potential investors and the public at large. Take it from Bruce Frumerman, CEO of investment management industry communications and sales marketing consultancy, Frumerman & Nemeth Inc. from the survey:


“You know your firm has graduated from commodity to brand when, after stating your fund’s name and strategy category, a prospect can add two or three sentences of elaboration about how you invest," he says. “If a hedge fund doesn’t actively market its investment- process story, it won’t outgrow being perceived as a replaceable commodity, known only by the pigeon-hole category of its strategy and its most recent returns."

This can apply not just for hedge funds, but for any type of investment product or service. Money managers across the board, whether they manage institutional or retail capital, are becoming much more scrutinized. If they can't define their clear narrative, they won't be able to distinguish themselves. Hedge fund managers in particular can’t just sit back and rely on their track record – indeed the survey points out that investment performance is not even the most important factor when investors choose a fund. (This is already starting in the hedge fund world)

“There are those who get it right, and gather billions in assets, and those with no idea of how to get their message across. They just use the same mumbled jargon and rarely convey what is actually happening. Marketers who think they don’t need to put it down on paper and convince others their process makes sense will get nowhere,” declared a managing director at a large European institutional investor. Our panelists also emphasized how important it is to spend the time and resources needed to make complex processes clear and simple. “Explaining simply just what it is you do is the single greatest feat for hedge funds,” said Michael Green, CEO, International with American Century Investments.  

By Zach Kouwe

By Zach Kouwe

“You never want a crisis to go to waste.”

Those were the now-infamous words of Rahm Emanuel, the current mayor of Chicago and former chief of staff for President Obama, in 2008.

In this election cycle, the private equity industry has been cast in a negative light by the media largely because of Mitt Romney’s background at Bain Capital. When other PE firms are trying to avoid getting sucked into the negative sentiment surrounding Bain, a relatively small and little-known firm has taken advantage of the opportunity by opening up to the media and telling its story.

The firm, Monomoy Capital Partners, first opened up in a New York Times story  in January, which profiled Oneida Ltd., a once iconic flatware company that had fallen on hard times. But the surprising thing was that Manhattan-based Monomoy injected new capital into Oneida and did a superb job detailing its plans to revive the company. The story even included this pithy quote from Oneida’s outgoing CEO:

 “They’re not Gordon Gekko,” he said of the firm. “It’s almost like they got together and said, ‘There’s a different way to do this.’”

Monomoy took a risk opening up to the NYT – the story could have turned out negatively, like many other profiles of PE-backed companies. Instead, Bloomberg BusinessWeek picked up the story and, after Monomoy gave a reporter access to its two-week corporate boot camp for executives and partners, the magazine ran a cover story in its current issue on the benefits of private equity.

The NYT’s Dealbook blog then followed up on Friday with a post calling Monomoy “the most popular private equity firm in town.” That’s what you call a PR grand slam and it’s all because of the firm’s willingness to open up when everyone else wouldn’t.