23 Apr Hedge funds and media, why the bad rap?
If hedge funds want to shape the perception of their industry, they need to reconsider their communication strategies, develop media relationships and reassert their original investment premise of real returns.
This was the upshot of a panel discussion hosted by the Alternative Investment Managers Association (AIMA, Australia Chapter) involving Jonathan Shapiro from the Australian Financial Review, Wouter Klijn from Insto Report, Emma Cullen-Ward from OneProfile Communications and Brett Ireland from AIMA. The group tackled the issue of why hedge funds tend to get a bad rap in the press, especially when the vast majority of them are more concerned with protecting capital than risking it.
The discussion gleaned five major reasons.
1. Many hedge funds prefer to operate under the radar and avoid making public comments, leaving an information vacuum for more speculative andcontroversial news to dominate.
2. Investors have lost trust in hedge funds. Many products failed during the GFC, distinct from their strategies, but that is a delineation one can only really appreciate after the fact. The way ‘products’ were marketed, geared and sold hurt investors at a time when hedge funds were just starting to mature beyond their exclusive investor circles as mainstream offerings.
3. The heterogeneous nature of the industry fosters independence rather than unity in times of trouble, with no particular segment wanting to address and counter criticisms levelled at hedge funds.
4. Many funds deny or distance themselves from their ‘hedge’ label, contributing to greater ambiguity and negativity around hedge funds. To help counter this, regulators such as ASIC have clarified how they define a hedge fund. See article by David Bell published in Cuffelinks: ASIC defines ‘hedge funds’ and what it means to you.
5. Marketing efforts of hedge funds have been legislatively protracted, forcing websites and collateral to appear closed, opaque and secretive. The JOBS Act, (short for Jumpstart Our Business Startups) in the US is lifting many of these regulatory impediments. http://oneprofile.com.au/blog/2013/04/23/hedge-funds-and-media-have-lessons-been-learned/ http://oneprofile.com.au/blog/2013/04/23/hedge-funds-and-media-have-lessons-been-learned/ http://oneprofile.com.au/blog/2013/04/23/hedge-funds-and-media-have-lessons-been-learned/ http://oneprofile.com.au/blog/2013/04/23/hedge-funds-and-media-have-lessons-been-learned/ http://oneprofile.com.au/blog/2013/04/23/hedge-funds-and-media-have-lessons-been-learned/See analysis prepared by Grant Thornton: 1 year later: The JOBS Act and its impact on hedge funds and private equity funds.
Other media tips from the panel discussion included:
- Define your media purpose and policy with your colleagues
- Embrace the ‘hedge fund’ term and differentiate your offering
- Media relationships over the longer term are more important than immediate results
- Talk to media when you have something to say, on record
- If you don’t want it in print, don’t say it
- Offer quote checks, but never demand them
- Know your comments in trade media are global
- Give reporters feedback
There is no intended media agenda to paint hedge funds as vigilantes, but there is an expectation for them to be more accountable and responsive to investor demands for transparency. Reporters genuinely want to learn about different types of strategies and the people behind them. Many have opened their doors to media, and have been pleasantly surprised by the interest generated.
”I’m only rich because I know when I’m wrong…I basically have survived by recognizing my mistakes.” George Soros.