As the alternative and traditional fund management industries become less distinct, competition between the two tribes is ever increasing, creating interesting marketing challenges, not least in the retail space. UCITS III, the European Regulatory framework and fund structure that allows hedge fund-like products to be distributed throughout the EU, are gaining in popularity with both hedge funds and main stream asset management firms. Analysis of UCITS III vehicles indicates there are now over 400 funds across Europe using the UCTIS III powers to target absolute returns. Given the competition, how do you market your new UCITS III product and make it stand out?

UCITS III has given a new lease of life to fund managers following the financial crisis. Many managers are now launching absolute return funds using powers available in the UCITS directive. A survey from HedgeFund Intelligence on the momentum-gaining trend of hedge fund companies going onshore reveals that more than half of European Hedge Fund companies plan to launch regulated, onshore versions of their strategies or have already done so. Furthermore, a fifth of European Hedge Fund managers have launched, or are launching a mainstream UCITS III mutual fund, while another third say they are considering doing so. In their research report the HFI researchers conclude:  “Considering the flexibility UCITS III offers, we’re forecasting that this trend [UCITS III fund launches] will continue”. 

Marketing a UCITS III
EDUCATION

This is a complex product for both the intermediary and end user, and successful uptake will require understanding to be developed throughout the entire sales chain. Market materials could benefit from being stripped back to the bare essentials in order to highlight the product’s unique selling points. The rules of UCITS III do increase the freedom of an investment manager, but there are also limitations. Knowing how a fund manager has interpreted these limitations is vital to the savvy investor. Fund managers need to clarify their strategy and educate prospective advisors and investors on their particular approach to managing the fund. Advisors will also be watching for the experience of the fund manager in this more complex area with its greater demands for risk controls.

Education is always important for intermediaries, but particularly so with a new and complex product. They also appreciate having part of the their work done for them and our own research shows that the support they most appreciate from providers is marketing materials they can use directly with clients to explain the product, bringing a promotional boost to the provider with the best explanation. With the resources and access to intermediaries, the main-stream traditional fund managers have a clear advantage over their hedge fund counterparts here. By employing digital marketing strategies, niche providers could economically tip the balance of influence a bit further in their own favour.

Another factor benefiting traditional providers is the likelihood that buyers for UCITS III products will be cautious. Fund Managers can expect some initial resistance, for whenever a sector sees a wave of new launches, alarm bells tend to ring out. With so many UCITS III products launching, investors are able to be more selective, so transparency and differentiation bring advantages. Even well known names in the market may be advised, therefore, to think through the sales story for the intermediary and ensure it hits the right chord to assuage concerns and promote the positive as well as having a unique proposition.

Online Marketing

In our research, we were surprised to find little UCITS III marketing directed at the end-user. It’s possible to find press release upon press release on the web, but the language and content is certainly aimed at an educated audience. It would appear the industry is more interested in telling competitors about their latest fund launches than potential advisors and investors. Furthermore, even if inspired by the press release to search for more information, it is not easy to find mention of UCITS III products on the websites of the larger asset management firms, despite having news-worthy, recent launches.

A good example of online UCITS III marketing comes from Jupiter Asset Management, who launched two UCIT III funds at the end of last year. These products were marketed specifically as funds that have been developed especially “for top-performing fund manager Philip Gibbs” (Jupiter online) and were referred to as such consistently, throughout all web publications. Customers could read up on the new products directly on the Jupiter website, where they could also buy the product directly, of course. In addition to this, Jupiter also used Twitter to promote the upcoming product launch via the GIMagazine.

Jupiter has got ahead of the game online by integrating digital activity to promote a differentiating message consistently applied. This approach is no longer an add-on to traditional marketing, but is fundamental to taking communication beyond promotion to engagement with the target audience.