These are the types of questions you need to be asking yourself if you hope to raise significant AUM and grow your CTA program into a force to be reckoned with. If you don’t know the answers to such questions, you may have some work to do.
Although many of today’s managed futures investors are new to this investment vehicle, investors have become more and more sophisticated. Some investors are highly experienced with managed futures, and may have invested in multiple programs already.
As this investment arena becomes more competitive, you must have an edge, not just in your trading but in your marketing plan as well.
Here are a few sources that you can potentially use to your advantage when marketing your program and competing for investor capital.
Is our strategy unique or unusual?
Let’s face it: There are a whole lot of option sellers and trend followers out there. Although these strategies may potentially yield positive results, investors may want to diversify not only the markets they are involved in but the strategies they invest in as well. Investors are always intrigued by new or different strategies, and showing them something they have not seen before may potentially make your program more appealing.
Do we offer a different fee arrangement?
Although a 2 and 20 may be considered the standard fee structure for a CTA, there is nothing written in stone that says you have to charge according to this schedule. What if you charge a lower management fee but higher percentage on the incentive fee? What about charging lower fees across the board? Although you are in business to make money, sometimes offering a different fee structure can pay off. For example, an investor might be more interested in a program heavily tilted towards incentive fees rather than management fees. If you offer something different, make sure potential customers are aware.
Do we trade markets not widely traded by other CTAs?
Just as the actual strategy or strategies you employ may help investors achieve a level of diversification, so may the markets you trade in. An investor who has capital invested in programs that trade U.S. stock indices may look for something with little to no correlation to equity markets. On the other hand, that same investor could also look to try to diversify by finding a program that trades non-U.S. stock index futures.
Do you look to educate your customers?
Providing education not only on your program but managed futures in general can go a long way towards adding value for your clients. Do you have education materials to provide your clients and prospective customers? Do you have the ability to show them how managed futures and your program might fit into their overall investment strategy rather than just telling them? Quality educational materials can be another great value-add that may help set your program apart.
If you are looking to build your managed futures program, you must think like a customer. Think long and hard about what your program can potentially offer that others can’t. Then capitalize on your strategy’s differentiation.
Shane Stiles is President of Gate 39 Media, a financial services marketing firm providing online marketing and application development for financial services across futures, equities, alternative investments and insurance.