The outlook for 2019 may seem ominous for many active asset managers. Passive U.S. equity funds are still winning the asset flow race, taking in nearly $24.1 billion as of March 31, 2019, while active U.S. equity funds lagged by $17.9 billion to due outflows, according to Morningstar.
Even though the market was relatively calm during the first quarter, many investors have forecasted that the rest of 2019 into 2020 could be turbulent, with uncertainty about the impact of trade negotiations, the inverted yield curve, and a potential slowing economy.
Asset managers know that market volatility and downturns are normal. Even a recession like the early 2000s or 2008 may be around the corner. Most asset managers with a long-term growth strategy advise their clients to stick with it and be patient, because their strategy has been proven over decades.
Advisors will often invest in what they have researched to be the best for their client’s money. In times of volatility, investment decisions are typically based on performance, fees, and manager tenure, among other factors.
The Story is the Thing
However, a key deciding factor is the asset manager’s overall story and strategy.
If you are a boutique asset manager, how will sophisticated investors know what you stand for? There are a few different ways. It could include content marketing, digital marketing, distribution/sales, and public relations.
Let’s discuss one cost effective approach, which is public relations.
What is public relations? Public relations can help asset managers cultivate a positive reputation with investors through various unpaid or earned communications, including traditional media, social media, and in-person engagements. It can also help firms defend their reputation during a downturn or volatility that threatens their credibility.
If you are a boutique asset manager, you may have a compelling and unique story. Or your firm may have just won a notable award. Or you may have reached a fund or firm milestone. Journalists at relevant publications may want to write a story about any of these or interview you about this accomplishment to spread the news to the public.
Along with building a credible reputation for your firm, an effective public relations program can help investors receive relevant information about what you stand for. If an investor has read about your firm in a credible source, then they may be more compelled to stick with your strategy versus your competitors – even when your short-term performance isn’t strong.
Follow Your Own Advice
If you have been executing a public relations and communications strategy, a market downturn is not the time to stop. Now is the time to move forward.
While cost-cutting may seem like the easier path to protecting profits in the short-term, the right public relations strategy may still generate the best return on investment for sustainable profits in the long-term.
It may be time to take a step back and think about the advice you tell your investors: be patient when the market goes sour, don’t try to time the market, and hold for the long-term.
Doesn’t it make sense to implement the same growth strategy for your own firm?
Milin Iyer is the Public Relations Director of Sondhelm Partners, a firm that helps asset managers, mutual funds, ETFs, wealth managers and fintech companies grow through marketing, public relations and sales programs. Click to read our latest insight articles.