Hedge fund limited partners certainly want strong investment returns, but, increasingly, they want a relationship with their hedge fund that encourages trust, offers transparency, and provides them with detailed—and timely—information about the performance of funds in which they’ve invested tens of millions of dollars. At small funds, a principal or another senior member of the firm handles investor relations/marketing, or these functions may be outsourced to a public relations/marketing firm that specializes in providing services to the alternative assets industry. At medium-size and large firms, there’s usually a dedicated IR/marketing professional—or even an entire department—that handles the large volume of requests from investors and keeps the deal pipeline flowing.
Duties for IR professionals vary by size of firm and other factors, but most respond to questions from limited partners regarding the performance of a fund and general market conditions; work with the sales and investment team to produce monthly and quarterly client newsletters that update limited partners on the status of their investments and the activities of the firm; create monthly updates of fund marketing materials (risk, trading data, net asset values, etc.); create pitch books (a document or presentation sent to potential investors that provides information on the firm and its major players, its investment strategies, its risk management strategies and reporting systems, and other information); and participate in road shows, where you explain your firm’s internal operations and new funds to potential investors—or pitch new funds to limited partners.
Investor relations specialists also maintain an investor management database to track communications with investors and progress in the sales pipeline; review pertinent hedge fund documents such as the offering memorandum and subscription documents (which provide the manager with background information on the investor); process and report investor transactions including subscriptions, capital call distributions, transfers, and redemptions; assist in the drafting/revision of due diligence questionnaires in coordination with the firm’s compliance and operations representatives; and help senior staff to perform due diligence on potential investors to ensure eligibility and compliance with federal anti-money laundering requirements.
Investor relations specialists also work to educate the media and public about the work of their firm and the hedge fund industry. They provide information to the media via conference calls, e-mails, social media posts, in-person interviews, and speeches at annual meetings. They also maintain their firm’s Web site and social media accounts.
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