Fondsboutiquen.com

Comment: Value investing, asset management and independence: “Triumph of patience” as a success factor

“In tranquility lies strength”: Investor education and the appeal to the patience of investors are not always the focus of sales activities at some fund companies, as is well known. Various products or approaches are often marketed very cyclically. According to the motto: “What’s going well right now?”, “1st place in a 1-year comparison” etc., the marketing activities of some fund companies are often very cyclical. The fact that there are other ways of doing things is demonstrated, for example, by many representatives of value approaches in the fund sector. Whether an independent or group asset manager: long-term thinking in the field of communication is paramount since it is like things. In which areas can this approach and communication strategy still be observed? Who appreciates such long-term thinking? Where are the opportunities and risks?

Sympathy among investors – identification of islands of interest

The art for many providers of value approaches is to identify the right investors for seemingly “boring” and long-term oriented investments that require explanation. As a rule, this cannot be achieved through pure performance advertising or trend argumentation. Qualitative and quantitative value approaches, the idea of risk premiums (“margin of safety”) and the ongoing communication of “the bet hasn’t worked out yet” – there is a community of loyal followers in this area. Many of the private and institutional investors appreciate these approaches, which require explanation, regardless of the product cover (in addition to funds, also investment companies, direct investments, etc.) Investor education in the form of events, commentaries, know-how transfer is particularly appreciated by this group of investors.

Family offices and independent asset managers

Investment concepts in need of explanation (time horizon for investment) are, for example, often appreciated by investors who themselves have a long-term investment horizon or by customers who think long-term. This is often accompanied by a certain sympathy and a pronounced understanding of entrepreneurially oriented investments. Certain wealthy private clients, family offices and independent asset managers can be included in this category: Belief in one’s continued existence for many years to come, continuity, equanimity and independent action without seemingly hectic, cyclical activity are increasingly found here.

As soon as investments are made for third parties, concentrated communication measures are necessary in case of short-term lack of success. On the one hand, the investor and his client must understand what he may have in his portfolio and for how long, and on the other hand, a continuous flow of communication from the provider to the “buyer” of the investment (family offices or asset managers for their respective clients) is required. As indicated above: those companies that manage to maintain the patience of investors with qualified information (as opposed to “factsheet terror”) in addition to satisfactory long-term performance will be ahead in the long term.

Sales and marketing for fund boutiques

There are a large number of “small”, independent houses that have successfully expanded their “fan circle” in the area of value investors for many years. Many houses from the Anglo-American area dominated the discussion years ago, and increasingly, continental Europeans are also becoming awake and successfully active (Scandinavia, France, DACH region, etc.)

Long-term thinking in sales can be the recipe for success. Contrary to popular opinion about sales and opportunism, the success of these companies shows that there is another way. A salesman who has to communicate a long-term story over a long period usually has a different profile (mentality etc.) than the classic old-school salesman. Many independent asset managers manage to establish a “new” culture of sales. It would be interesting to see how “big” corporate-linked houses react to this trend. Independence or not: Of course, some addresses offer attractive value products.

Know-how and communication for value investors

Sources of information in the form of conferences, events, business breakfasts, etc. In the value sector, there are various offerings (Value Intelligence Conference, ACATIS Value Conference, etc.). Specialized capital management companies such as Universal Investment, Ampega, Hauck & Aufhäuser, etc. often offer interesting funds with a value approach, also with the Verband unabhängiger Vermögensverwalter Deutschland e.V. (VuV), one can identify various providers. Similar to asset management approaches, a variety of approaches can be found there.

The fact that independent asset managers are meeting with increased interest among investors was also confirmed by the 1st Frankfurt Funds Boutique Panel in 2014: More than three-quarters of all participants surveyed (asset managers, fund of funds managers, family offices) emphasized that they consider the importance of independent asset managers to be “increasing” in 2015.

Conclusion

Diversification is also important for investment approaches. Value investment is one approach among many in the universe of asset management – of course, other approaches can rightly find interest among investors. Value investment thinking tends to open doors for investors who, due to their origins (independence, entrepreneurship, small and medium-sized businesses, etc.) have freedom in their investment policy anyway and are not under constant pressure from third parties to communicate “performance victories” to their clientele every quarter. Many companies operating in this environment are working on building and expanding the fan community for long-term oriented investment – similar to the BVI in Germany.

The cross-cycle way of thinking and communicating deserves more intensive discussion in the fund industry as well – between the poles of sales pressure and “greed” on the part of investors, the value investment sector may once again provide interesting thought-provoking impulses for regaining investor confidence: As is so often the case, a profitable investment can simply mean drilling thick planks of wood: Investment opportunities do not fall from the sky, the virtue of “invest and wait patiently” is often a classic way to success!


Source: www.institutional-investment.de
Photo: www.pixabay.com

Spread the article

Leave a comment

Your email address will not be published. Required fields are marked *