Hedge funds are not meeting the requirements of investors across a range of reporting and communication categories, according to research from IR Halo, an investor relations and communications consultancy.
The study also reveals opportunities for fund managers to enhance their ability to keep or attract clients through improved investor communications.
IR Halo surveyed 109 investors and 126 fund managers to obtain a more detailed picture of the IR requirements of hedge fund investors, and determine where service gaps continue to exist. Among the most significant findings are:
- The majority of hedge fund managers lack awareness of the peers against which investors measure them, while their investors would like to see more of this analysis from managers themselves
- Most investors are not satisfied with the level or quality of information available on hedge funds’ websites, yet only a minority of hedge funds see their websites as an IR tool. Most, however, recognize a need to improve on their web reporting capabilities
- Investors remain unsatisfied with the quality and detail of the information being presented to them by hedge funds: while reporting is regular enough in many cases, more qualitative information is desirable
- Investors are regular users of the internet for additional background information on funds and their managers, including to support or supplement investment decisions
- Most hedge funds employ an individual in a dedicated IR role, while smaller or newer firms may combine this role with other functions
- Only a handful of much larger funds retain bigger IR teams. At the same time, however, hedge funds consider the IR function to be essential.
‘This is the first study of this type we have conducted, but it already points to some interesting gaps in the IR process that fund managers can address to generate a competitive advantage,’ says Stuart Fieldhouse, director of IR Halo.
‘With the technology currently available, it should be easy for even smaller or start-up funds to develop an IR capability that rivals some of the bigger and more established firms. Peer analysis is one area where managers may be able to point to superior returns versus their real competitors, as opposed to benchmarks like a market index or risk-free rates.’
The full survey is now available and free to download from the IR Halo website.
