There is so much euphoria around UCITS and a perception that building a UCITS hedge fund will bring investors. This is far from the truth or reality.

Alternative Decisions recently participated in a panel discussion on marketing UCITS III hedge funds, kindly hosted by the Living Group. Amongst the panel were Merchant Capital, Pimco and Tomlinson Consulting with around 50 London fund managers there to hear our opinions.

Here were some of the salient points we thought relevant to share:

• Fund mangers have a duty to educate people to ensure they attract the right type of investors. The benefit of education is that it will assist to build loyalty and makes investors more bound into the fund, which will be imperative when the investment strategy underperforms. Loyalty creates a sticker investor base. 
• The UCITS III regime does have flexibility but there are hard rules. These rules should not be flexed and a strategy shoehorned into UCITS if it does not fit. We also recommend some room between the portfolio shape and the rules to allow the manager some flexibility in case the rules change and to demonstrate to regulator they are working within the spirit of a regulated regime.
• The most important part of a UCITS fund is getting the right marketing material and defining your story. A tight well defined investment story helps to communicate a fund’s unique selling points. This is important in a busy market.
• Any UCITS product design needs to be married to a well defined marketing plan which should be developed as the product takes shape. There is little benefit having a fund launched and live without a target audience defined or marketing materials all ready. Launching a fund is like getting the ticket to a ball, once in the venue you need to dance and mingle to make the evening a success. A simple analogy but one we like.

One of the main outcomes from the event is we are now talking to more managers about how to market themselves, assist with routes to market and what they can do to increase their visibility. If you need the same assistance please give us a call.