Preqin’s latest research, based on a survey of over 100 active institutional investors, reveals a clear disconnect between what information fund marketers are providing at the initial marketing stage and what investors want to see.
Investors were most critical of the way fund marketers presented performance track record in initial marketing documentation, with 72% stating that this data was average or worse.
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On average, institutional investors surveyed receive 35 closed-end private equity fund marketing documents per quarter, up from 31 in 2012, with some receiving significantly more than this. With a record 1,990 private equity, real estate and infrastructure funds currently seeking investor commitments, providing all the key information investors are looking for in a clear format is even more important to a successful fundraising process.
Key Findings
- 66% of investors surveyed rated the full terms and conditions sections of initial fund marketing documentation as average at best.
- The fund strategy and investment team marketing information sections were also each considered average or worse by more than half of investors surveyed.
- Only the fund overview information provided in initial fund documentation was considered by the majority of investors (60%) as good or better.
- 52% of institutional investors surveyed consider it important or very important to be able to directly compare initial fund documentation of various vehicles with each other.
- However, a significant 56% stated that they currently find it difficult or very difficult to compare initial fund marketing documentation.
- 91% of investors surveyed reject funds at the initial filtering stage because they do not match their investment criteria.
Comment:
Stuart Taylor, head of investor products at Preqin, said: "We spoke to over 100 investors in private equity, real estate and infrastructure to see what they are looking for from initial fund marketing materials, and how fund marketers and the industry at large can better address their needs.
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By GlobalData"Our conversations reveal that many fund marketers fail to get past the hurdle of initial fund documentation because their marketing materials do not align to investors’ investment criteria or are lacking crucial data, overloaded with unnecessary information and, particularly in relation to track record, are often viewed as misleading.
"Preqin has identified these emerging investor trends and has stepped in to improve the flow of initial fund documentation between fund marketers and their target audience. Enhanced Fund Listings, which will be launched in November on Preqin Investor Network, lets investors request standardized marketing documentation with the information most important to them from fund marketers, generating leads for funds in the process and making the initial fund marketing process more efficient for all. Furthermore, the service steps in to provide the comparison tools investors need when analyzing first-cut fund documentation."
