Raising the bar for capital raisers

Hedge funds are clamouring to hire marketing professionals who can help them raise ‘sticky’ capital after a year when a number of underperforming strategies struggled to stem investor outflows.

There were “10 times” as many opportunities for marketing professionals within hedge funds during the first quarter of 2014 so far compared to the same period last year, according to Sasha Jensen, founder of headhunters Jensen Partners, which focuses on hedge fund marketing roles.

Some of this is down to a desire to capitalise on a new-found investor appetite for hedge funds. It was something of a banner year for the industry in 2013, with $63.7bn of net inflows, according to Hedge Fund Research. Much of this was down to increased appetite for event-driven and equity strategies, but some firms, notably macro funds which $23.7bn during the year, struggled to keep investors happy.

Hedge funds are therefore looking to bolster their marketing teams, but it’s becoming an increasing sophisticated role. It’s no longer enough to be the guy who drums up interest in the fund – you need to be a strategist.

Increasingly, senior marketers need to be able to have deeper, more strategic conversations with LPs, and firms value their ability to not only set up meetings but to conduct meetings alone, at least in the initial stages,” says Anthony Keizner, managing director of headhunters Glocap. “To do this, marketers need to be able to understand the strategies inside out, understand the risk/reward profiles of the investors and be able to take a consultative, as opposed to sales, approach. Firms realize that this is vital in maintaining assets, as well as attracting new capital.”

In other words, not only must you be able to market the fund effectively, you need to be able to find investors who are not going to pull their money at the first sign of under-performance. Despite the overall positive figures for hedge fund assets in 2013, 40% of funds experienced record outflows, according to HFR.

Hedge funds want technical specialists, says Jensen: “We have seen that marketers who possess a proven track record of raising long-term patient capital are more likely to be hired as they are highly sought after,” she says. “We are seeing that marketers with a trading background are also in high demand as their precise technical knowledge enables them to close investors, many times without the need for the founder or PM to walk through the detailed analysis and an explanation of trades within the portfolios in a subsequent meeting.”

Despite the uptick in demand, hedge funds are not willing to offer pay rises, said both Jensen and Keizner. Instead, they’re incentivising their staff on what they want to bring in – namely long-term investors.

“Pay for marketers is increasingly discretionary rather than formulaic,” he says. “While marketers are still rewarded on keeping and growing assets, firms understand that a dollar raised of higher quality, sticky capital is more valuable than a dollar raised of quick money, and want a mechanism whereby they can reward marketers for their results that isnt easily quantified in a strict formula-based compensation model.”