There are seemingly two types of asset managers, good investors and good marketers: throughout this piece I will discuss this duality. Interestingly, their ability to grow and flourish seems to be pretty much even. Furthermore, both seem to hit a growth ceiling in and around $5B AUM. Arguably, this may seem like a win to some, however, for most of the teams we work with at this level, they tend to feel stuck, like they are spinning their wheels.
Simply put, this is the industry saying, to both groups, we like you, but you aren't special.
Let's step back for a moment and focus on the duality of managers, starting with the good marketers. These teams look good, have an abundance of charisma, have sharp looking collateral, produce great language, and are active contributors to online social communities. In terms of their acumen as investors, their performance bumps into so – so, it's just good enough to stay in the game. LPs invest with them, because the perfectly embody the outer sheen of the what the world perceives to be "institutional."
The good investor, on the other hand, function at the industry's core. These are the die-hard analysts, theorists, and financial warriors. They have typically worked in NY, London, Singapore, Hong Kong, etc. for years, if not decades. They drink their coffee black and get to the point. In this club, websites are a waste of time. Marketing decks are ugly things, full of endless graphs and tables. In terms of their performance, it bumps into the topside of so – so, it's a little better than average.
The underlying question, how do the managers described above achieve the coveted status of being considered "special," the key that unlocks the path to AUM of $30B plus?
Let's start with the good marketers. These teams need to move beyond the superficial. Typically, they need to bolster their investment processes, reporting, and back office. Being polished is encouraged, yet their needs to be depth. The good investors, on the other hand, need to start attributing value to marketing, first impressions are important, a modern website with some depth is important, and marketing decks shouldn't be fifty pages long.
Most importantly, groups on either end of the discussed duality need to start to inspire. Special only really happens when people are emotionally engaged, put another way, loyal. The great brands of today understand this. You can't be superficial or overly internal and / or elusive. You need to be seen, heard, and respected. It is here our industry falls down. Sure, there are teams that flirt with it, Bridgewater, Sequoia, and Two Sigma come to mind, however, none of these firms can stand beside companies like Nike, Patagonia, and BMW as brands. Most are quick to tell me that it is impossible for any asset manager to achieve the status of the forementioned brands. My point... I don't think anyone is actually truly trying.
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