Asset AllocationNovember 7, 2013

Prepare For the Pitch: Fund Managers Increase Alternatives Marketing Staff

<i>Cerulli Associates has found 41% of asset managers anticipate prolonged shift to hedge funds, private equity, and real estate.</i>

Reported by Featured Author

(November 7, 2013) — A drive for alternatives in today’s low yielding environment has led to almost half of fund managers wanting to increase sales and marketing staff for these assets, according to research from Cerulli Associates.

Its report, the November issue of “The Cerulli Edge-U.S. Asset Management Edition”, found 47% of asset managers expect to hire dedicated marketing personnel and 41% expect to hire dedicated sales personnel in the next 12 months to support alternative investments.

Even the world’s most conservative investors are having to reassess their attitudes towards real estate, private equity, and hedge funds. On November 1, aiCIO reported that German institutional investors are expanding their investment horizons—historically extremely heavily weighted to corporate and government bonds—into alternatives.

The trend has also been seen in the US: analytics firm Opera Solutions reported the managed account platform market, including hedge funds and other absolute return strategies, is growing at a triple-digit rate among large institutional investors.

The hiring spree at fund managers has already started in earnest: Cerulli’s data showed fund managers have hired more dedicated sales professionals than any other alternatives-related position in the past year.

The number of sales personnel dedicated to alternative products increased 54% from 2012 to 2013 among managers that distributed alternatives to both retail and institutional clients.

Pamela DeBolt, senior analyst at Cerulli, said: “Alternative products can be complex and hard to understand for both advisors and end clients. Firms will be most successful when marketing and sales efforts include a significant educational component.

“Looking ahead, we are seeing the hiring shift slightly from sales toward increasing marketing staff. Larger firms tend to create more collateral and educational tools, and appropriate levels of staff are required to maintain and update these tools.”