Communicating through a crisis is always difficult, but communicating through COVID-19 presents new challenges that many hedge fund managers haven’t faced before.
With travel restrictions and physical distancing measures still in being enforced, in-person pitches are out of the question. Instead, managers have to rely on their marketing materials to speak for them. But those materials might seem a bit stale today as a result of the speed and severity of the impact from COVID-19.
To stand out, hedge fund managers need a marketing strategy that can differentiate them as much as their strategy does. Managers who can be agile and find effective ways to capitalize on all available marketing channels will improve their chance of success in the post-COVID-19 world.
Here are some key areas to strengthen your communications strategy during (and after) this crisis:
Be clear about losses, while highlighting your recovery
When it comes to performance, it’s critical to be upfront about any large redemptions or material impacts to your firm as a result of the pandemic.
The chaotic market reaction to the virus caught many fund managers off-guard. Use this opportunity to talk about the lessons you have learned from this event, as well as the steps you have taken to reposition and/or recover losses.
If you have halted redemptions or if there were delays in filing requirements, be sure to state why that happened and how you are making improvements that are in your investors’ best interests. Along with your pitchbook, website or any marketing materials, it is important to have a strong, updated due diligence questionnaire to address any important changes you have made.
Demonstrate strength going forward
Be sure to describe any changes you have made – or additions you are going to make – to your team to help you navigate any future volatility that may occur. It may also be valuable to highlight whether you have more than one prime broker, or you are planning to add another prime, in an effort to minimize counterparty risk or diversify relationships in advance of any future market turmoil.
While COVID-19 has created unprecedented volatility, it has also shed light on new opportunities. If applicable to your fund, it’s important to convey how your strategy aligns with the evolving climate and can capitalize on potential growth opportunities. Is your strategy able to capitalize on market instability or identify companies unfairly punished by the pandemic? Do current or newer holdings have strong fundamentals that may lead to their potential rebound? If so, make sure your investors and prospects know that.
Diversify your connection with investors
The COVID-19 crisis has underscored the importance of using technology to communicate, particularly when it comes to keeping investors informed about their holdings. You might want to consider how you can make your marketing materials more dynamic and flexible enough to address any concerns your investors might have.
Beefing up investor-communication pages in your pitchbook or on your website is one way to accomplish this. These pages can provide details about the importance of regular communications and your commitment to keeping clients up to date.
Providing virtual reporting and Q&As on an annual or quarterly basis are great ways to engage investors. For a personal touch, your marketing can include links to infographics or short video clips of your founders or CIOs, providing assurance or illustrating how your strategy is managing this crisis.
Articulate operational strength
During uncertain periods, hedge funds need to re-visit and improve any language related to disaster recovery and business interruption. Is your team able to communicate in real-time via work-from-home tools, such as secure video conferencing, file sharing and so on? It may also be worthwhile to note any insurance you have for business interruption.
Key-person risk is another factor that should be noted. While the risk of an unexpected death and disability to a key decision-maker is always an important consideration, COVID-19 has added a new level of complexity to the story. If there is one key person at your firm, it is important to articulate your succession plan.
Our firm is experienced in helping hedge funds communicate their key messages.