Lack of face-to-face meetings challenge hedge fund IR teams

Zoom dominates most of our time working from home these days, but if you are a hedge fund IR professional this new remote marketing reality is of top concern, according to Dynamo Software/Imagineer’s annual investor relations survey. Other concerns include the lack of investor interest in allocating capital due to COVID-19; the challenges of introducing new strategies in the pandemic-laden market environment and capturing the attention of prospective investors. The survey, conducted over two months, presents the views of investor relations professionals of all experience levels at more than 100 hedge funds and private equity fund management firms ranging in AUM from under $250 million to more than $30 billion. And like the rest of us, investor relations teams too have adjusted to the ‘new normal.’ The most common forms of client engagement in 2020 include virtual events, unique commentary and more frequent meetings. These activities, professionals said, help them to drive home a value proposition and enable them to build more trusting relationships. An overwhelming majority (80%) said that their work now revolves around CRMs, web portals and due to coronavirus -- web conferencing platforms. Only 10% said they used a generic CRM product or something they built internally. Outside of CRM and web-reporting platforms, survey participants also indicate managers are heavily reliant on web-conferencing tools like Zoom, Goto Meeting, and On24. Many respondents see the trend of saving and sharing those webinars from their secure investor portals gaining more traction and becoming the norm, according to Dynamo. Some even see replacing their large annual or bi-annual investor events with digital experiences over the medium term. A few managers the CRM software firm spoke with have even started using tools like videoconferencing robots to enable prospects and clients to "visit" the office to conduct diligence and "meet" with staff. The Dynamo team also found those who have replaced in-person client entertainment events with virtual activities from digital escape rooms to cooking classes, and more this year and see the trend continuing for at least another 12 to 18 months. In keeping with prior years, most respondents the firm’s survey (82%) identified their asset management firm’s approach to investor relations as proactive versus reactive. Importantly, most managers also cite proactivity as essential to retaining clients. Managers who self-identify as proactive service providers tend to assert that this attribute not only guides them through their daily efforts but seems directly correlated to their firm's ability to raise and retain assets, according to Dynamo. This type of proactive engagement is done with regular client meetings, creation of engaging videos, outlining a trade or trends via email messages to clients, tailoring materials and fund/position commentary based on client type and segmenting clients based on their type or size of allocations. The survey also reveals that most managers leverage industry-specific platforms, like Dynamo or Clienteer. Dynamo Software purchased Imagineer Technology Group last month in a deal that combines two vendors to the alternative investment industry. It means that Dynamo now serves more than 1,000 users for its CRM, deal management, portfolio monitoring and investor reporting capabilities. Together the firms account for nearly half of the top 50 hedge funds by AUM. When it comes to technology more is preferred. Respondents indicated their expectations for improvements and feature enhancements to industry-specific CRMs to help them leverage automation, artificial intelligence and machine learning to improve efficiency. Now while a great A.I. has yet to replace an IR professional, most firms whether they are offering hedge funds or other alternative investment strategies employ a full-time individual or team to handle these functions. Nearly 50% of survey respondents represent firms with more than $1 billion. Conversely, almost 30% are from emerging or growth-stage organizations with $250 million or less. The other 23% split nearly 50/50 in the middle: firms with $250 million to $1 billion in assets under management. The only category of manager where multiple respondents said they had no staff in the IR or marketing functions was those firms with $500 million to $999 million in AUM. In those instances, the CFO/COO play a tag-team approach to handling marketing. Meanwhile firms with less than $500 million in assets on average have two full-time staffers focused on marketing and IR. The largest firms Dynamo spoke with in the survey have more than $1 billion in assets. These firms tend to have fewer investors than other smaller firms the tech provider surveyed. These firms tend to have long-term track records, large institutional LPs and consistent investment returns. These groups would have up to 11 on their IR team on average and in addition to worries over COVID-related challenges, they say they need more tech-based tools. And during the pandemic, investors are likely to continue expecting more from IR teams. One vice president at a $3 billion hedge fund summed up the need in their response to the survey as, “Very engaging, and clear communication, especially in trying times such as the current pandemic.”

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