Small to Mid-Sized Investment Managers Can Get a Big Boost with the Right Marketing
MID-SIZED MANAGER MESSAGING
For many small to medium investment managers, the current financial marketing landscape feels like David & Goliath. As the market becomes increasingly competitive and crowded, standing out has become increasingly difficult, and those able to are typically the ultra-large investment managers with institutional brand recognition. There may, however, be a silver lining.
Recent studies released by two of those Goliaths produced some very good news for smaller money managers. In a 2015 white paper, The Boutique Premium, AMG found that boutique managers generally outperformed non-boutique managers in 9 out of 11 equity product categories, and by an average of 51 basis points annually.3
“In addition, top-performing boutiques added 55 basis points more value than poorly performing boutiques detracted on an annual basis, illustrating that these strong returns were not simply a function of higher risk,” said Andrew C. Dyson, AMG’s Executive Vice President and Head of Global Distribution. “The top-performing boutiques also created exceptional net excess returns, with top-quartile boutique strategies outperforming their primary indices by an average annual 589 basis points after fees. These results support our belief that the alignment of interests fundamental to the boutique model creates significant value for clients.”
Furthermore, a recent Barclays article claims the general underperformance by the hedge fund industry can be attributed to managers being too large, lacking the nimbleness to take gambles that have generated trademark high returns in the past.
Despite 2016’s stall in growth of assets under management with the worst performance since the Great Recession, global AUM had an annualized growth rate of 5%1 from 2008 to 2014 and is expected to increase from $63.9 trillion to around $100 trillion by 2020.2 It’s no surprise that these predictions have most of the assets being consolidated by the giants of the industry.
With general market sentiment focused so favorably on large asset management and the data proving otherwise, we believe there is a significant opportunity for small to mid-sized managers to capture some of this growth with effective investment branding and messaging strategies. While large managers certainly have their strengths, smaller managers have their own advantages as well. Smaller managers have:
- Less capital to move around and can act quicker on opportunities
- Provide more customization to your portfolio and more attention to their investors
- Smaller asset bases and can compete in less efficient, smaller markets
- A better alignment of interests
Among the many roadblocks small to mid-sized managers experience, failing to clearly understand and communicate their value to investors and asset allocators is one problem that can be remedied. By clearly defining and understanding of your competitive value and differentiated messaging, an asset manager can drive results. It is important however to be careful, as your value proposition to your investors should not be just about you but rather the values your investors hold. Making the effort to understand why your current and future clients choose you, and better understanding how you serve their needs is both important and necessary. Even in the world of B2B and institutional asset management branding and marketing, those experiencing the most success will be those who consider both the rational and emotional side of their pitch.
Use a powerful institutional messaging strategy to tell investors why you’re better than the big guys AND how you better serve their needs. This can be much more thought-provoking and involving that saying you seek superior risk-adjusted returns, regardless of market cycle. By implementing this messaging across your website, pitch decks and other investor communications materials, even the smaller and mid-sized asset managers can achieve significant asset growth and be on the way to more effective financial marketing.
To learn more about how large asset managers are excelling in investment branding and what steps you can take to fortify your brand, check out our most recent whitepaper, The Brandability of Trust.
1 Yahoo, Global Asset Management Growth Stalls in Worst year Since Crisis http://finance.yahoo.com/news/global-asset-management-growth-stalls-160000774.html
2 PWC, Asset Management 2020 http://www.pwc.com/gx/en/asset-management/publications/pdfs/pwc-asset-management-2020-a-brave-new-world-final.pdf
3 AMG, The Boutique Premium, http://www.amg.com/PressReleaseDetail.aspx?id=4294967571&m=2015