In addition to the more familiar job roles within a hedge fund such as analyst, principal and portfolio manager, there are professionals who help hedge funds find new investors and assist in marketing the firm.
While financial experience is helpful for these marketing jobs, the firm would more likely be looking for marketing experience, particularly to high net worth individuals and financial institutions. Ideally, you could combine both interests, bringing a solid knowledge of the industry along with proven experience and a network of contacts.
Marketing hedge funds is different from other investment products such as mutual funds in two important ways.
First, hedge funds can only offer their investments to “accredited investors.” An accredited investor is considered to be more sophisticated than the average investor. He or she must be pre-qualified in person or by a detailed questionnaire, and typically earns at least $200,000 per year ($300,000 joint income with spouse), and is expected to continue earning at that level.
Corporate entities such as banks, insurance companies, registered investment companies, business development companies, small business investment companies, charitable organizations and trusts with assets in excess of $5 million are also considered to be accredited investors. These people and entities are thought to be sophisticated enough to carefully evaluate high-risk investment opportunities such as hedge funds.
Second, because of the restriction just mentioned, hedge funds cannot offer to sell their investments using any type of general solicitation or general advertising, such as newspaper or magazine advertisements, radio commercials, or any other form of public advertising. In order to communicate or “market” to a potential investor, the hedge fund must have: 1) an existing relationship with the investor, prior to the communication; or 2) have verified that the person is indeed an accredited investor, possessing the financial acumen to properly evaluate such an opportunity.
Despite these restrictions, hedge funds do manage to build awareness, promote the expertise of their portfolio managers and principals (and the firm’s track record) and attract new investors through various marketing activities.
Next time, we’ll look at some of the ways they can accomplish and the opportunities for hedge fund marketers.