Johnson&Company
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Why New, Early-Stage and Smaller Hedge Funds Work With Us:


IT TAKES MORE THAN INVESTMENT RETURNS TO ATTRACT ASSETS.


"Intelligent Marketing" is now a mission critical business necessity for a hedge fund.

76.4% of hedge funds ‘TAP OUT’ their network of investors within 1 year

Source: How Hedge Funds Can Strengthen and Build Their Affluent Client Base
(Authors: Prince & Grove - Sponsored by Rothstein Kass)

  • Since 2011, 50% of the hedge funds that have closed had AUM less than $49m.
  • At launch the average hedge fund had $26 million in AUM.  
  • 2,201 funds, 21% of the 10,482 funds, grew AUM to $100 million or more. It took an average of 16 months to do so.
  • 817 funds, 7.8%, grew AUM to $500 million or more. It took an average of 42 months to do so.
  • 388 funds, 3.7%, grew AUM to $1 billion or more. It took an average of 55 months to do so.
  • 89% of ALL hedge funds FAIL to reach $100 million in AUM, the minimum institutional threshold.
  • 1 out of every 275 sub $200 million AUM hedge funds establishes a "3rd Party Marketing (TPM)" relationship.
Source:"Hedge Fund Survivorship Bias and Attrition" - The Journal of Alternative Investments (http://www.iijournals.com)

   The #1 reason most hedge funds fail to raise assets: Poor, inappropriate and ineffective marketing.

Almost every new and small hedge fund has the misconception that raising assets and consistent AUM growth results from investment performance. Make no mistake, investment returns are crucial but returns alone are insufficient to attract and retain assets in the post-Madoff/credit crisis world where demands by investors and consultants are highly idiosyncratic and more stringent as reflected by protracted due diligence examinations.


Most new and smaller funds, even those started by individuals and teams with deep investment experience and outstanding pedigree, lack of a clear and acute understanding of MARKETING. The vast majority of sub-institutional hedge funds are severely compromised in regard to the requirements, complexities and nuances of marketing. In fact, most new and smaller funds are under-resourced and unprepared to meet the challenges of appropriate qualitative and quantitative investor/intermediary engagement, which culminates with chronic failure to raise assets.

Exceptional investment performance means nothing if the RIGHT investors and intermediaries don't know about it as well as have a deep understanding of the enterprise-wide processes that serve as the source of creating those returns and how those mechanisms will sustain return realization. Moreover, if a new or small fund does not have the appropriate level of visibility, awareness and relationships among the most-suitable and qualified investor segments, it will not raise assets.

                        
A Serious Commitment To "Intelligent Marketing" Must Be a Priority To Succeed Raising Assets.

Despite all the attorneys, accountants, fund administrators, prime brokers and technology providers available to help launch and support a new or small hedge fund, when it's time for marketing and raising assets it's a solo effort. The responsibility of marketing and raising assets for new, early-stage and smaller hedge funds ALWAYS resides with the fund.

The truths of raising assets for a new or smaller fund boil down to 3 crucial facts:
  1. Experienced marketing professionals that work with new, early-stage and smaller funds are virtually non-existent.
  2. Without "Intelligent Marketing", a fund will NOT raise assets, despite investing skill and exceptional returns.
  3. If a small fund does not meet the necessary qualitative requirements and standards of highly idiosyncratic investors and intermediaries, then no quantitative metrics will be enough to raise assets.

          For a new or smaller hedge fund, "Marketing Alpha" is as important as investment alpha.

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