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Why New and Sub-$100 Million AUM Hedge Funds Work With Us:


IT TAKES MORE THAN INVESTMENT PERFORMANCE TO RAISE ASSETS.

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)

89% of ALL Hedge Funds FAIL to reach $100 Million AUM.
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 MARKETING.

 Inappropriate, Inconsistent, Inadequate and Ineffective Marketing Results In Chronic Failure Raising Assets.

The survival and success of ANY hedge fund as a business is dependent upon assets under management (AUM). 


Plain and Simple: AUM is the lifeblood of a hedge fund. To that end, the raising, retention and expansion of AUM is the #1 priority of EVERY manager and fund. Those objectives are even more critical for new and sub-$100 million AUM funds.

With that perspective, MARKETING is an essential process. However, almost every new and smaller hedge fund manager has the misconception that raising assets and consistent AUM growth results from investment performance. Make no mistake, investment performance is ALWAYS crucial but alone it is insufficient to attract and retain assets in the post-Madoff/credit crisis world. Candidly, the demands and requirements by investors, consultants and advisors in manager evaluation and selection now extend well-beyond a narrow focus on investment performance. In fact, the allocation process is highly idiosyncratic and significantly more stringent as reflected by protracted due diligence.


Most new and smaller funds, even those started by individuals and teams with deep investment experience and outstanding pedigree, lack 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 the manager/fund along with a deep understanding of the enterprise-wide people and processes that serve as the source of creating sustained investment performance and how those mechanisms support business continuity. 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 Complete Commitment To "MARKETING" is MANDATORY 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 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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