Real Talk with Sasha Jensen of Context Jensen Partners | FINalternatives

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TodayFinalternatives sits down with Context Jensen Partners founder Sasha Jensen to discuss the challenges of recruiting in the alternatives spaceher outlook for the hedge fund industryand a deep dive into the companys Hedge Fund Marketing Power Index.

Jensen leads a team of recruitment specialists dedicated exclusively to capital raising executive search. Prior to founding Jensen Partners (formerly HFE Search), Sasha Jensen was the Director of Alternative Asset Management Recruiting for The Gerson Group in New York and London, where she specialized in placing marketing teams for hedge funds and investment banking platforms.

Sasha Jensen established Context Jensen Partners on the idea that a need existed for a strategic, data-analytical methodology to placing asset raisers. Jensen created an investor database that would offer her clients quantitative as well as qualitative insights on who the best marketers are across all strategies.

Today, that database is global and includes 4,000 investors across all alternative strategies. The firm’s successful track record on Jensen’s commitment to competitor intelligence market mapping of all distribution platforms. We have more than 600 firms mapped out and growing.

Finalternatives: Howdidyougetintotherecruitingbusinessinthealternativesspace

SashaJensen (SJ): Istartedmyprofessionallifeasajournalist, workingonFleetStreetandthenasheadofinvestigationsforthe SundayIndependent inJohannesburg. WhenIgotbackfromSouthAfricatoLondonin 2000 IwasintroducedtotheCEOofafinancesearchfirmwhosuggestedthatmybackgroundasaninvestigativejournalistandmyabilitytoconnectquicklywithpeoplewouldbecomplementarytoacareerinrecruitment.

Itookthatadviceand, afteraseriesofrolesatotherrecruitmentfirms, Istartedmyownfirmin 2013; JensenPartners, afirmthatsexclusivelydedicatedtotheplacementofcapitalraisersandteamsglobally. ToelevatetheplatformanditsresearchproductIsoughtaninvestorinContextCapitalPartnersinDecember 2015, andwebecameContextJensenPartners.

FIN: Withrespecttohedgefunds, whatisyourtakeontheoverallgrowthoftheindustry?

SJ: Imbullishonthefutureofthehedgefundindustry, particularlyasasourceofdifferentiatedreturnsanddownsideprotectionforinvestorportfolios. Tobesure, theindustryhashitafewspeedbumps, buttheoveralltrajectorycontinuestobepositive. Whilesomeofthelargerfirmshavesufferedperformanceissues, thereareawiderangeofmidsizedplayerswhohavesuccessfullyraisedassetsandgeneratedalpha. Weexpectinflowstocontinueforthesefirms, especiallyfrominstitutionalinvestorsandfamilyoffices, astheindustrymatures

FIN: WhatledtotheinceptionoftheHedgeFundMarketingPowerIndex?

SJ: Wewantedtodevelopamorerigorous, quantitativeapproachtotheevaluationoffundmarketers. Itsonethingtojustrankthefirmsthatraisedthemostassets, butwewantedtogetacompletepicture. Thealternativesindustrytendstoonlyfocusonthelargestfirms. Asaresult, wewantedtodevelopanempiricalmethodologythataccountsforbothsizeandperformance, andattemptstoleveltheplayingfield. 

FIN: Whatsthemethodologybehindtherankings?

SJ: Welookedathedgefundswithaminimumof $500 millioninassetsundermanagement, usingdatafromPreqinshedgefunddatabase, andmeasuredforeachfirmthetotalassetsraisedandthedifficultyofraisingthoseassetsbetweenJanuary 2015 andJanuary 2017. OnlyhedgefundfirmsthatwereincludedinthePreqindatawereconsideredfortherankings.

FIN: Whathavetheinitialrankingsuncovered?

SJ: Theresnoonesizefitsallapproachtogoodmarketing. Andweknewgoinginthatanyformulaicapproachtoevaluatingmarketerswouldignoremanyofthecriticalfactorsthatmakeafirmsuccessfulatcapitalraising. Wealsounderstoodthatanyformulawouldnecessarilybeflawedthroughunderrepresentingorignoringthesesoftfactors, suchasafirmsbrandvalue, industrycompetition, productinnovation, producttypeandthestructureoftheteam.

Thisindexconfirmedourconvictionthatmarketingisafundamentallyqualitativeprocessthatlargelydependsoninterpersonalinteractionsbetweenindividualplayers. Thisisunlikelytochange, andwebelievethefirmsmostlikelytohavesuccessgoingforwardaretheonesthatutilizeathoughtful, longtermmarketingstrategythatincludeshightouchclientserviceandawellmaintaineddistributionnetwork. Wealsobelievethathavingaquantitativemetricisanimportantsteptowardsenhancingtheevaluationofmarketers, andwelookforwardtorefiningthisconceptfurtheraswecontinuetocollectfeedback.

FIN: Whattraitsmakesasuccessfulmarketerforalternativeassetmanagers?

SJ: Theindustryhasmaturedoverthelast 10 years, andespeciallyinthelastcoupleofyears, asmoreinvestorshavestarteddemandingahightouchlevelofclientservice. Ourclientsaredemandingthatwerecruitmarketerswithdeeptechnicalability, ableandwillingtotalkthroughtheportfolio 24/7.

Formarketers, successisntjustmeasuredbythetotalamountofassetsraisedanymore. Marketersneedtobeabletocultivateandmaintainstrongerrelationshipswithinvestors. Thatrequiresanindepthunderstandingofthefirmandofeachstrategy, andanabilitytonavigateeverythingfromnegativeheadlinestomarketshockstocrisismanagement. Eventheslightesthintthatafirmisstrugglingcouldleadtoasurgeofredemptions, anditsincreasinglytheresponsibilityofmarketerstomakesureinvestorsarekeptuptodateonwhatishappeningwiththeirassets.

FIN: Werecentlydiscussedwhynichestrategiesaresoimportantintodaysindustry. Areyouseeingmoredemandforothernichestrategies?

SJ: Theresagrowingconsensusinthealternativeinvestmentindustrythatincreasedcompetitionhasledtoovercrowdinginpositionsandthereforediminishedreturns. Thisisalargepartofwhyasignificantpercentageofrecentinflowsaregoingtonichestrategies. Investorsareconstantlyonthehuntforalpha, andnichestrategiesofferaccesstomarketsthathavenotyetbeenpickedclean

FIN: Whataretheopportunitiesandchallengesofmarketingnichealternativestrategies?

SJ: Thebiggestchallengeisthelackofaneasytousebenchmark. Manyinvestorsrelyonbenchmarkstoevaluatehowmanagersareperforming, andformanyofthesenichealternativestrategiestherejustisntanappropriatebenchmark. Itsonthemarketingteamtoclearlyexplainhowastrategymightperformunderdifferentmarketconditions. Ifyoudontoverpromise, youcantunderdeliver.

Ontheotherhand, theopportunityisthatinvestorstodayareveryopentohearingnewideas. Itsuptothemarketertomaketheinvestorfeelcomfortable, whichwillusuallymeanasmallinitialallocationuntilthereismoreofatrackrecord

FIN: Whereelseareyouseeingdemand

SJ: Wereseeingalotofinterestinquantitativeinvestmentstrategies. Quantshavebeentheflavorofthemonthforacoupleyearsnow, andwedontseethatchangingastechnologycontinuestoimprove.

Otherstrategiesthataredrawingalotofdemandincludeprivatecredit, ESGandrealassets, includingrealestateandinfrastructure. Theseareallfairlynascentmarkets, buttheyregrowingquicklyasinvestorslooktodiversifybeyondstocksandbonds. Werealsoseeingalotofinterestinmultiassetstrategies, whichgiveinvestorsaconvenientwaytoaccessmultiplemarketssimultaneously

Privateequityisanotherareawherethereisalotofdemandrightnow. InourQ1 newsletter, whichincludesdataonmarketingmovesacrossthealternativeinvestmentindustry, wehighlightedhowprivateequitymarketinghireshitanalltimehighinthefirstquarter, followingaverystrong 2016. WeareseeingverystronghiringforQ2 also ournewsletterisoutattheendofJune.

FIN: WhileprivatemarketsfundraisingremainsstrongintheUSandEurope, haveyouseenanyofthesefirmslooktoAsiatoexpandtheirdistributionplatforms?

SJ: WeareseeinganinterestinguptickindistributionhiringinAsia. LPsaretalkingaboutinvestmentinthecontinentandourfirmhastakenonanumberofAsianmandatesrecently. TheU.S. andEuropearedefinitelystilltheleaderswhenitcomestothealternativeinvestmentindustry, butthereisgrowinginterestinotherpartsoftheindustry. Chinaisstillintheveryearlystagesofopeningupitsmarkettoprivateinvestors, andthereareanumberoflargehedgefundsthathavealreadyregisteredChinafocusedunits. ThenifyoulookatSingaporeandJapan, thosecountriesarehometosomeofthemostsophisticatedinstitutionalinvestorsintheworld, withextensiveexperienceinvestinginalternatives. Sotheappetiteisthere, butaswithanynewmarket, adoptionislikelytobeslowatfirst. MarketerswithcontactsinAsianmarketsareconstantlyinhighdemand.

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