Reviled and hailed by investors, adored and vilified by the financial and popular press – misunderstood by many – hedge funds appear to operate paradoxically under both a cloak of secrecy and a spotlight of the media.

Hedge funds are organized to avoid many of the SEC’s regulations that are applied to most conventional investment funds that are publicly offered, such as mutual funds. Because of their unregistered status, hedge funds may not be offered publicly and are only available to a limited pool of potential investors that meet a net-worth threshold. To avoid SEC registration requirements, hedge funds must not advertise or publicly market the fund to raise investor commitments. Instead, fund managers must cultivate pre-existing relationships to attract potential investors.

So does that mean, in effect, that hedge funds can not market themselves? Is branding and marketing communications off limits to hedge funds. In short- the answer is a resounding, “No”. The prohibition against marketing does not mean that a fund does not need to communicate, it simply means that there are more restrictions that must be followed.

Take for example websites for hedge funds….

A survey of many hedge fund websites finds that many post only disclaimer information that sometimes scrolls on and on endlessly.  No information on specific funds or links to specific funds is available for public viewing. If a viewer wants to see information on a particular fund, they must be carefully qualified before they are able to log in to view this kind of information. And compliance restrictions can string out approvals for as much as a month. And because managers want to protect their investment strategies and the managers they work with, precious little information has traditionally been on many hedge fund sites.

Hedge fund websites go the gamut from no information, to those that give some idea of a funds strategy or niche. But just because there is a lack of copy does not mean that there is no marketing involved. Just look at the three examples above… Which one has the best presentation, instills the most confidence, appears to be the most polished?

Every touch point, no matter how insignificant is an opportunity for a hedge fund to sell- and it does not matter if it is a website homepage, a monthly summary or an exposure report. While fund performance, track record and investment strategy are certainly among the most important elements for a potential investor, it can not be denied that presentation will have a decided effect on whether an investor decides to commit dollars to a particular fund.

We recently worked with a client who has had a very long and successful track record operating as a hedge fund of fund manager. Like most investment vehicles it suffered in the last quarter of 2008, and the scams and pyramid schemes in the industry threatened to tarnish an otherwise perfect track record. In doing our due diligence we found that most clients were very satisfied with the performance and personal client service, but they had a “feeling” that the fund operated like a mom and pop operation. Despite consistent earnings, they wondered about the professionalism. With a weak presentation and sloppy communication practices, some clients were even nervous about keeping some of their money in the funds.

When we were called in we surveyed all communication channels- from web presence, monthly letters, PowerPoint presentations, to office decor. Indeed the Fund had a homegrown feel to it, characterized by a total lack or awareness of how or why communication influences financial decisions.

Knowing that  the most frequent client touch were the monthly reports, we went about redesigning (in Word and Excel) all of the monthly financial summaries. The second most important tool was a scripted PowerPoint that clearly pointed to the benefits and differentiation between this fund and others. Knowing that liquidity, transparency and due diligence were critical components, we made sure that all communications addressed these pressing issues.

Bottomline? We could not use overt marketing but we did not waste any opportunity to communicate the Fund’s strengths. We made sure that every touch point was produced professionally as well as economically. We worked closely with the CIO and the CEO to make sure that every monthly letter, every email was branded and did not look like a xerox of a xerox. We set up systems so every individual in the firm has access to company-wide templates, typefaces, and color palettes. And we perfected the Fund presentation being used for new investors- insuring that the funds will continue for years to come.