One Million Funds...!

Say it out loud…makes you think of the Austin Powers movies doesn’t it?!

Recent research from Morningstar and Visual Capitalist suggests that within a matter of a few years, investors will be faced with 20x the number of funds to choose from as globally listed companies!

Dramatic pause…repeat…over one million funds to choose from!

Great news for the service providers in the funds eco-system, but, really not good news at all for fund managers seeking assets. And let’s face it, even more challenging for investors who somehow are supposed to choose from this overfilled candy jar to select which products taste best. Too much choice in any B2C or B2B market leads to paralysis.

Perhaps some context is helpful here. 20 years ago, the fund universe was just 10% of the current size and back then we still thought the proliferation of collective, co-mingled vehicles was astonishing!

Investment types like us talk about total addressable markets – well, statistics tell us that there is around $100 trillion dollars invested in funds but nearly half of it is managed by just 10 firms ($42trillion). Conservatively, the remaining pot is shared between around 999,800 funds. This might also be OK until we realise that the next 50 firms manage most of this $58 trillion. The vast majority of ‘live’ funds today have <$25mn assets under management. They aren’t even covering their costs.

So why is that?

There is no causal link between the success of the top 60 firms in asset gathering being due to their relative or absolute investment performance. Put another way, there are thousands of small funds with exceptional performance that don’t raise assets.

Fund managers tend to believe that creating incrementally better performance will attract assets. That by aiming for better numbers than the peer group will grow the book. The reality is that better performance might enable you to keep your existing clients for longer but it will not open the floodgates to new ones. I mean there are 1mn funds out there right! Given that performance is the most variable & least predictable component of fund management, it’s astounding the amount of focus placed upon it!  

So, what to do?

Let’s flip the camera and focus instead on the predictable, consistent drivers of gathering assets in any fund management firm.

Controversially, let’s park investment management performance. Decent numbers are just table stakes these days & mostly are only just a bit better than the peer group. They will not entitle a firm to be running billions. 

Instead, every fund management firm has the essential tools necessary to gather assets in size:

  • An iPhone
  • A founder story
  • Early adopter clients
  • Tough times and better climes
  • Longevity in the market
  • Long serving team members
  • A brand
  • A home location
  • An edge
  • A point of different
  • A LinkedIn profile
  • A website

When we think about all those vast asset gathering machines, they all focus their marketing mix on the hot buttons above. Very few will ever talk about investment performance. I know what you’re thinking. The tier 1 firms can outspend us so what’s the point of competing on marketing?

Until the world moved online, that view had credence. Now it doesn’t.

To create and tell your story can be fast, low cost, effective and most of all an exercise you are in control of. Creating a distinctive & authentic brand message doesn’t depend upon next week’s non-farm payrolls.

Onboarding your funds with digital marketplaces gets you visible in new markets at speed and at low cost.

Posting 3 fresh LinkedIn stories per week per team member is free.

You can outpace any large firm. You can have your new message out there within hours whilst the big guys are still arranging the meeting to discuss the meeting about who needs to be present at the planning meeting… 

To close, websites are always the window to the soul of any investment firm.  Here’s a couple of examples of boutiques that became players because they dared to tell stories in a different way.    

https://www.catalyst.com

https://www.lafamiglia.vc/

If you’re ready for us to help you tell your story and make 2024 your most successful asset gathering year ever, reach out.