Friday, March 27th, 2015

One Key to Running a Hedge Fund is Learning How to Say You Don’t

An Industry Admits the Need for a New Label and Rebrand

The title, taken from this story in The Wall Street Journal, discusses how hedge fund managers are distancing themselves from the moniker.

David Kabiller, co-founder of AQR Capital Management, which has $130 billion under management, says:

"Labels can create a lot of emotions."

Labels should create emotion, both positive and negative. But a label - a brand name - succeeds only if the owner controls the context in which the name or label is communicated. The Hedge Fund industry no longer controls this context.

A good example of losing this context is offered by Kabiller, who says his mother has a "perverse" reaction to the term hedge fund

Kabiller indicates AQR uses the phrase to describe some of its offerings but typically only later in the marketing process, and after an investor does so first.

Another example of losing the communications context of a brand name is offered by Takuma Aoyama, chief investment officer at AIFAM Inc., which helps wealthy institutions invest in hedge funds. Aoyama says he learned firsthand the perils of the hedge-fund designation, when running a Singapore hedge fund in 2008 to lend directly to local companies. He found many borrowers "fearful of anyone who claims to be a hedge fund from New York."

He eventually closed the fund.

Says Aoyama:

"Maybe we should have branded differently."

 Enjoy the full story in The Wall Street Journal.

[Image credit: Forbes March 2009, Source: Mark Stivers]

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