Anyone who has the ability to successfully navigate the many channels of capital within the hedge fund industry is worth their weight in gold (and that’s rising every day). There are two major components of marketing and selling a hedge fund which each take constant attention and refining.
- Understand the DNA of the many distinct distribution channels open to hedge funds for raising capital and
- Having an electronic hedge fund of fund of hedge fund database of the right people to call on within those channels.
While some people develop their own databases from scratch, this is often a long painful road with many days spent leaving voicemails with firms that have gone out of business, merged, switched investment focus or charge too high of fees to work with. This has led to many hedge funds investing in fund hedge fund databases that are automatically updated with half a dozen pages of information on fees, structure, management information, etc. This trend with hedge fund databases goes along with the “outsource everything that is not our core competence” model that many both emerging managers and $1B+ players have taken.
9 Fund of Hedge Fund Database Tips
If you need a list of hedge fund of funds or are thinking of purchasing a fund of hedge fund directory or database here are my top 9 tips:
- Take the time to call or at least email the firm who offers a fund of hedge fund database, these will sometimes be referred to as fund of hedge fund or fof directories.
- Only work with well known, reputable firms that specialize in providing hedge fund databases or hedge fund of fund databases. Avoid small shop fly-by-nighters at all costs
- Take the time to really get familiar with the information provided within the database, ask for a sample of what the information will look like. It really is an investment that could save you literally thousands of hours IF you pick the right hedge fund database for your business model. See a Hedge Fund of Fund of Hedge Fund Database Sample.
- Ensure that the database is updated at least once a quarter, contact details and firm information gets old very quickly.
- Expect to pay $750-$8,000 for a high quality hedge fund database, many cost around $2,800 while others can cost up to $30,000/year. Be sure and know the trade-offs of buying a physical database versus subscribing to one online. If you don’t have a hard copy of the data in Excel or Access format you may not be able to use it once a time-based subscription expires. For some firms this is fine, for others it would be a costly mistake.
- Make sure the hedge fund database you use is compatible with your systems. Do you use SalesForce? Act? Goldmine? Excel? Word?(lord help you)
- While you are kicking the tires of your potential new hedge fund database make sure it has complete information on a firm. You don’t want to call a firm asking if you can send over your PowerPoint presentation only to find out they are really a competitor or a division within another firm you called that same day.
- Don’t steal a database. This may sound obvious, but it is common for employees to copy parts of a database for later use or use some other un-ethical means of obtaining database details. Don’t, it is not worth it. Always take the high road and you can stand behind every action you have ever taken.
- This list only contains 9 tips instead of 10 because this one is worth more than the rest combined. Ask hard questions when you are buying fund of hedge fund database. Ask how often your database details will be updated. Ask exactly how many hedge funds are updating their information. Some databases will say that they have details on 9,000 hedge funds while the reality is that some of them haven’t updated their information in 4 years…make sure all of the data is being updated at least once a year.