Hedge fund branding is increasing as institutional investors' presence within hedge funds' client bases is forcefully nudging even the most tight-lipped firms to open up and explain what they do.
The Jumpstart Our Business Startups Act of 2012 might have lifted the ban on advertising private funds, but sources said the most important impact so far is the reassurance it provides to hedge fund managers about establishing a brand identity for their firm and investment strategies.
To date, only a few very institutionally focused hedge fund and hedge funds-of-funds companies have deliberately set out to develop a brand presence aimed at clients, prospects and to some extent, the general public.
Industry sources said companies already promoting brand awareness include Aetos Capital Management LLC, BlueMountain Capital Management LLC, Bridgewater Associates LP, Caxton Associates LP and Diversified Global Asset Management Corp.
For branding newcomers, initial steps might include ramping up their Internet presence, tiptoeing into social media, and producing brochures that won't initiate an SEC investigation should an average Joe get hold of one.
The target audience for these communications is the chief investment officer of a large institution.
“Ten or 15 years ago, hedge fund managers were so secretive, they would scarcely open up even to investors in their flagship funds,” said Richard Dukas, president and CEO of Dukas Public Relations Inc., New York, whose clients include Morgan Creek Capital Management LLC.
“But as institutions have become a much more major part of their client base, hedge fund managers have been forced to start communicating,” Mr. Dukas said, adding his PR firm and others have seen a sharp rise in the number of hedge fund companies seeking branding advice.
The “logical progression of institutionalization” is firm and product marketing, said Glenn M. Buggy, a partner based in the New York office of executive recruiter CTPartners LLC.
“Hedge fund managers are focusing for the first time on being able to, and having to, talk about their firms and their culture. Most have never had to deal with it before and it makes many very uncomfortable,” Mr. Buggy said.