There’s a clear disconnect between what information fund marketers are providing at the initial marketing stage and what institutional investors want to see.
A survey by Preqin finds that the full terms and conditions and performance track record sections were the areas initial fund marketing materials investors were least satisfied with.
Sixty-six percent of the investors surveyed rated the full terms and conditions sections as average or worse, and 72% of investors considered initial communication on performance track record to be average at best.
Here are some of the other key findings from the survey:
- the fund strategy and investment team marketing information sections were also each considered average or worse by more than half of the investors surveyed;
- only the fund overview information provided in initial fund documentation was considered by the majority (60%) of investors as good or better;
- 52% of institutional investors consider it important or very important to be able to directly compare initial fund documentation of various vehicles with one another;
- 56% stated that they currently find it difficult or very difficult to compare initial fund marketing documentation; and
- 91% of investors reject funds at the initial filtering stage because they do not match their investment criteria.
Various institutions also stated that there was a lack of credibility regarding the reporting of track records.
“Our conversations reveal that many fund marketers fail to get past the hurdle of initial fund documentation because their marketing materials do not align to investors’ investment criteria or are lacking crucial data, are overloaded with unnecessary information and, particularly in relation to track record, are often viewed as misleading,” says Stuart Taylor, Preqin’s head of investor products.