Best communication practices for fund marketers


Financier Worldwide Magazine

February 2014 Issue

February 2014 Issue

With a record 2109 closed-end unlisted private equity, real estate and infrastructure funds currently in market, one of the biggest challenges fund managers and placement agents face is securing investor commitments in a highly competitive space. Fundraising managers and placement agents need to ensure their fund is in front of the widest audience possible, not just existing investors or the ‘usual suspects’. This article looks at the best practices fund marketers should adopt during the initial contact stages of discussing potential commitments with investors. It draws on the results of Preqin’s extensive survey of over 100 accredited institutional investors in August 2013. 

The changing investor landscape

There is clearly a thirst for alternative asset fund information from an increasingly well informed investor universe; but does this appetite for knowledge translate into a more proactive investor base? The most common way investors source new alternative assets opportunities is via a direct approach from a fund manager, with 61 percent of institutions using this approach as part of their investment process. This is a decrease compared to the 72 percent of investors surveyed in 2012 that named being approached by a fund manager as one of their main means of sourcing new opportunities, suggesting that more investors are adopting a proactive approach to sourcing new alternative asset investments. Another source of investment opportunities comes via introductions to funds from the placement agent community, with 37 percent of investors stating they utilise this avenue as part of their selection process. 

Over half (51 percent) of institutions surveyed in August 2013 used their own internal investment team to source new opportunities, while half of respondents stated they utilise networking and their industry contacts to find suitable investment opportunities. This further demonstrates that a significant number of investors are keen to devote time and resources into proactively finding the best and most suitable funds to invest in. In a different study in April 2013, we asked investors if they had a proactive, passive or mixed approach to sourcing new investment opportunities. Half of those surveyed said they were proactive, predominantly sourcing new investment opportunities themselves, while a further 19 percent used a mix of both proactive and passive methods to source funds. Less than one-third (31 percent) relied predominantly on third parties to suggest new funds, for example using consultant recommendations or direct approaches from fundraising managers. 

A crowded marketplace: competition and pitfalls for fund marketers 

While incoming leads remain a common source of new opportunities for investors, there has been a decline in investors’ reliance on these types of opportunities since 2012. 

On average, institutional investors in alternative assets receive 35 closed-end private fund marketing documents per quarter, up from 31 in 2012. Some investors receive significantly more than 35 documents, with 10 percent of the investors surveyed in August 2013 receiving fund marketing documentation for over 100 funds each quarter. With many investors inundated with marketing materials, even good opportunities that fit their investment criteria can struggle to be heard above the noise. Only 17 percent of funds that send unsolicited marketing documentation to the investors surveyed typically make it through the initial filtering stage of the due diligence process. On average, just two of these funds go on to secure a commitment, meaning less than 6 percent of funds that make an approach are successful. Interestingly, less than half (46 percent) of the marketing documents sent to investors are in line with the investors’ investment criteria, meaning that the majority (54 percent) of proposals are immediately discarded from the process at this early stage. It is therefore not surprising that 91 percent of accredited investors surveyed stated this lack of alignment as the most common reason for rejecting funds at the initial filtering stage. 

As well as positioning a fund in front of a wide audience of institutional investors, it is also important that marketers display the right fund information clearly and effectively in order to maximise the chance of securing commitments. A number of respondents cited problems with the fund documentation provided by marketers as a key reason for rejecting funds during the early stage. Fourteen percent of investors found that the documents provided by the fund marketer lacked important information, and 10 percent of investors felt that key details, while included, were not explained clearly. Fifteen percent of investors stated that they will not even consider unsolicited approaches from fund marketers. 

How fund marketers can improve their initial marketing efforts

We also asked investors to rate the different sections of typical fund marketing materials. While there were a number of positive responses indicating the skill of many managers at communicating this information, there is certainly room for improvement from the industry. The fund overview was the only section rated as good or very good by most (60 percent) of investors surveyed, with all other areas rated by the majority of investors as average or worse. 

The full terms and conditions and performance track record sections were the areas of initial fund marketing materials investors were least satisfied with. Sixty-six percent of investors surveyed rated the full terms and conditions sections as average or worse and 72 percent of investors considered initial communication on performance track record to be average at best. One family office stated that poor and imprecise performance track record information was the leading reason it rejected opportunities at the initial stage. Various other institutions surveyed stated that there was a lack of credibility regarding the reporting of track records; data provided can be inaccurate and manipulated to show the fund manager in the best light, with a common complaint surfacing about fund marketers providing just gross performance records when net figures are essential to the consideration process.


The investor landscape is changing, with more investors proactively sourcing and analysing new closed-end private fund opportunities than ever before. Investors are increasingly approached by fund marketers with initial fund documentation, but at the same time are increasingly averse to exploring unsolicited fund opportunities. Many investors want to undertake the initial groundwork in regards to sourcing new funds, and even those that rely on incoming leads from fund marketers are tiring from offers that are clearly not aligned with their investment criteria. Crucially, both proactive and passive investors want clear and standardised information from fund managers when receiving initial fund marketing documentation. In order to be successful in the crowded fundraising market, fund marketers will need to adapt to the changing demands of the institutional investor universe.


Stuart Taylor is Head of Investor Products at Preqin. He can be contacted on +44 (0)20 7645 8831 or by email:

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Stuart Taylor


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