Two Institutional Investors Reveal What Impacts Their Decisions
Two highly respected institutional investors offered complementary, but different advice to hedge fund managers seeking new or additional funds to manage during a presentation to a “full house” meeting of the Connecticut Hedge Fund Association.
While Clark Cheng of Merrimac Corporation said he values personal relationships and trusts his instincts when it comes to learning about hedge fund managers and executives, Samantha Rosenstock of Man FRM related how receiving regular written news updates from prospective managers can add significant weight to her decision process in allocating institutional funds.
The two appeared at the Greenwich, CT, event, “Raising Institutional Capital” on Thursday, Sept. 13, 2018. The panel, hosted by David Burke, MKP Capital Management, was attended by nearly 200 hedge fund and portfolio managers and other financial services professionals. Bruce McGuire, the president of the association, introduced the panel.
Operational due diligence was a very high requirement for both of them, which includes assuring the public reputations of the hedge fund executives are clear of what could be distracting, negative reports, although both acknowledged that controversy might simply be intrinsic in hedge fund investing.
Of course, performance matters most. Cheng pointed out he wants to see how managers ranked in difficult or down markets as well as buoyant periods. Rosenstock said she also looks for managers who have endured periods of investor redemptions and survived to fight another day and succeed.
Rosenstock explained that particularly over time, consistent updates about fund performance, outlooks, economic perspectives and market observations can give her insight into how a fund thinks and makes investment decisions.
Cheng added: “Newsletters are important, but make sure they are not too long. The longer the newsletter, the worse the performance.”
Lumentus takeaway: Email newsletters and blogs can work for you, particularly if you communicate with your investors and prospects consistently, but concisely.