It's all in the approach when it comes to marketing hedge funds to institutional investors, 60% of whom receive at least 15 unsolicited pitches per month, according to new survey data from Preqin Ltd.
With institutional investors accounting for an estimated 72% of hedge fund assets globally since the beginning of the year, hedge fund companies need to adopt a new approach, wrote Amy Bensted, manager-hedge fund data for London-based Preqin, in the firm's June special report.
“Marketing to institutional investors requires a different approach, and a knowledge of ... how they prefer to source funds is essential in gaining consideration for new vehicles. With investors monitoring ... from 10 to over 100 hedge funds, getting a fund on their radar is the first step in gaining institutional capital,” Ms. Bensted said in the report.
The good news for hedge fund managers is that 52% of the 50 institutional investors Preqin surveyed in May said they rely on their consultants to screen potential hedge fund managers. Other investors find hedge fund managers through direct contact with hedge funds, networking and conferences, and third-party marketers. A majority of institutions — 66% — prefer to receive hedge fund information by e-mail, while just 18% said they prefer in-person meetings.
Given strong institutional interest in hedge funds, it may not be surprising that just 5% of survey respondents said they don't want to be contacted at all. — Christine Williamson