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How Social Media is Changing the Hedge Fund Industry

Traders Magazine Online News, May 23, 2018

Donald Steinbrugge

With more 15,000 competitors, the hedge fund industry is extremely competitive. Many institutional investors are contacted by thousands of managers a year, meeting with a few hundred, have follow up meetings with fifty, and ultimately allocating to two. In this competitive environment, any edge over the competition is vital. Having a well thought out social media strategy is one way to achieve this. During the past five years, the use of social media has significantly increased within the hedge fund industry. Today, a vast majority of firms have at least some presence on social media. Far and away the most utilized social media platform in the industry is LinkedIn, which can provide benefits to multiple parts of the firm. This paper will focus on its use to enhance a hedge fundís sales and marketing strategy.

Utilizing LinkedIn to Enhance a Hedge Fundsí Sales and Marketing Strategy:

Identify, Enhance Knowledge, and Screen Investors - The hedge fund investor universe is opaque, with very little information publically available about investors. Many hedge fund investors do not even have a website, or if they do, it is often limited or password protected. LinkedIn is a great resource to map out a firmís organizational structure, figure out who conducts hedge fund research, and who has the authority to recommend and ultimately allocate to an external manager. Those in hedge fund research can be identified either by job description or based on a number of common connections. Basically those employees with the most common connections typically are involved with hedge funds. Once this information is obtained, a pre-existing relationship can begin to be established by having a conversation with the individual or firm about their investment needs. Once a pre-existing relationship has been established, future communication can focus on hedge fund products that fit the needs of the investor. †

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