Coronavirus: Five Survival Protocols for Investment Fund Managers

MATTHEW FEARGRIEVE sets out five behavioural protocols that investment fund managers need to adopt to survive the impact of COVID19 on their business.

Coronavirus market meltdown: the Bulls and the Bears wearing clinical facemasks

It is not only turbulent, highly volatile markets that investment managers have to grapple with. In these days of lockdown and self-isolation, managers, like all businesses, have to work harder at reaching out to their clients. Especially when the portfolio is suffering losses. In the unprecedented circumstances in which we all find ourselves, a feeling of disconnection from the manager, or of being kept in the dark, will drive investors to the exit just as surely as portfolio losses. So now is the time for the key personnel of all management firms to think of their investors and develop their interpersonal skills.

A look at how some managers have stepped up their client outreach programmes yields useful insights and teaches us valuable lessons about how managers can work to retain clients throughout the pandemic and its fallout.

We looked at two managers, from each end of the active management spectrum (this sector having the hardest task to ride out the downturn), FundSmith and Bridgewater Associates, and extrapolated five behavioural protocols for investment managers in general.

  1. Embrace the opportunity. Consider how your investors’ daily lives and routines have changed during the pandemic, and embrace the opportunity that this presents. You have a captive audience, sitting at home in front of their screens. So, whilst you might be underwhelmed in other areas of your business, formulating and communicating to your investors a key message is essential. Leverage online communication and content distribution channels like LinkedIn and Twitter to convey your message and, importantly, regular updates and commentary as the lockdown continues. Remember, there is a lot of panic and fake news circulating the web, and your second biggest priority- after protecting your fund’s assets- is to keep your investors in the loop and duly provided with high quality information around portfolio performance, portfolio positioning and significant strategy adjustments.

Whilst the pandemic presents real challenges for the fund’s portfolio, it also provides managers with a golden opportunity to reach out and connect with a captive audience. A dedicated communications team will be essential for all medium-to-large sized firms, to coordinate and assist with the uplift of informational requirements that the crisis, and the manager’s response thereto, will generate.

Being in touch with investors during this crisis and keeping them in the loop will be key to retaining them when we are all able to return to business-as-usual. But the lockdown will not last forever, and now is the time to act.

By MATTHEW FEARGRIEVE

Matthew Feargrieve hedge funds lawyer joins law firm Appleby Global in Zurich
Matthew Feargrieve hedge funds lawyer joins law firm Appleby Global in Zurich
Matthew Feargrieve

Matthew Feargrieve is an investment management consultant with more than twenty years experience of advising fund managers.

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