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Morningstar reported that active US equity funds suffered the largest monthly outflow since October of 2008.

Active managers had a tough time in June.  In fact, they’ve had a tough twelve months: active managers have lost over $315 billion in assets over the past year according to Morningstar. 

Assets have been consistently flowing into passive investments, and this trend won’t be stopping any time soon.

The funds that will thrive in the future are those with low fees, good overall performance and an interesting investment strategy. If you are an active fund manager, here are a few essential items that you must incorporate into your overall strategy.

Have a consistent, compelling story and message

Asset managers need to develop a consistent and compelling message and story to tell their investors. Saying you are an interesting or unique large-cap, long-only mutual fund is not going to sell. SunStar Strategic helps fund firms develop unique core messages to attract clients and shareholders.  

Know who is buying your fund

This sounds simple enough, but many boutique fund managers don’t consistently track who is buying and redeeming their funds. There are resources available to that can help you identify your investors/advisors. Some platforms will provide you with that data, but interpreting it, and consolidating the data given a variety of formats and fields across multiple sources can be very challenging. One of SunStar Strategic's trusted partners, Celera Systems had developed a solution.Your distributor and transfer agent are also great sources of information. In addition, another partner of ours, Discovery Data (who recently purchased Meridian IQ) provides valuable data about advisors - while they are not identified as your investors - if you know the firms, you can find names of their individual reps. This data allows you to slice and dice all the reps out there by a host of different criteria, such as AUM, career length, city, affiliations, and products used, to name a few. Taking advantage of this crucial data gives your sales people the tools they need to target financial intermediaries. 

You now have an elaborate database, so what?

Make sure you have a marketing program in place that consistently communicates with the intermediaries in your database. This could be through webinars, blog posts, media mentions or other email marketing campaigns.

Also, human interaction is NOT dead. It is still the best way to engage with your investors and prospects. There are multiple wholesaling models a firm can utilize. Try to incorporate one that fits your budget. Hiring internal wholesalers who are managed by a senior executive to identify and target clients and prospects may make the most initial sense for a boutique firm. Once internal staffing has gathered strategic client data, it may be most efficient to hire an external wholesaler to develop and enhance the business relationship.


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Photo credit: kenteegardin via Foter.com / CC BY-SA