Friday, December 18, 2015
PWC Hedge fund survey - old school marketing still the driver
Who you know and what you do - that is the story of how hedge funds are going to raise money. The PWC Global Hedge Fund Distribution Survey 2015 is a treasure trove of survey information on the upheaval in the marketing and distribution of hedge funds, but there are some things that are consistent in marketing.
The key drivers for fund selection do not seem to change. Number one is performance, not risk-adjusted returns. Investors still have an attitude of "show me the money". Second most importance is experience, followed by strategy. Give me absolute returns from experienced professionals then we will talk about strategy and other issues. Sounds like the world has not changed.
For all of the talk about new distribution channels, the number one source for new clients is prior contact with the manager. Investors need to know the manager and the manager needs to know the investors. The contact is critical. The second most important source is the prime broker. While everyone may complain about capital introduction, managers still depend on this channel for new money. Again, the world may not have changed as much.
The final interesting chart are the investors types that will be likely buyers of hedge funds. For Europe, the answer is still fund of funds. In the US, the driver will be endowments while Asia may be dominated by pension funds. Retail distribution is growing but the tradtional sources of funds are still the most important.
The distribution world is changing, but if you want to raise assets, you still have to focus on "old school" marketing for 2016.