In the past couple of years, the investor relations function has evolved faster than it has in the past twenty years. COVID, undoubtedly, helped speed up the digital evolution of how investment firms' IR teams engage investors. Still, other factors attributed to this trend, including technology advancements, dispersed workforces, and the rise in ESG considerations.
So how can IR teams keep up and make sure they are communicating with investors most effectively? At Swiss Financial Services, we have noticed a few trends that we believe will shape the future of investor relations in the alternative investment funds industry.
Move towards virtual communications
The ease of communicating virtually is making the need for face-to-face interactions fewer and farther between. Virtual Data Rooms (VDRs), video conferencing, and video pitches helped IR teams connect with investors during a time when most interaction was virtual. Even though people are beginning to attend conferences and schedule one-on-one meetings, many have embraced technology as it saves time and is cost-effective.
INCOS, a digital media company, introduced Virtual Pitchbooks to asset managers to help them engage with investors during the pandemic (and beyond). The product has evolved into a forward-thinking and efficient way of transforming an investment manager's pitch. By combining video production, distribution, and analytics, fund managers can engage with more investors and see who is most interested in their investment strategy. The analytics can help fund managers gauge investor interest before meeting one-on-one, saving them and the investor valuable time.
Be proactive vs. reactive in investor communication
According to an article by the Alternative Investment Management Association, “The model for how IR teams of all sizes interact, communicate and service their investors is quickly moving beyond the monthly one-pager and quarterly phone call.”
Since COVID, being proactive, open and transparent in communication has been essential in maintaining goodwill with investors. During uncertain times like the pandemic or market volatility, investors seek transparency. Providing an email update or scheduling a teleconference can demonstrate to investors that your firm has a pulse on what is going on in the market and is confident in navigating the turbulence. Being proactive and transparent goes a long way toward fostering strong relationships with fund investors.
The Rise of VDRs and Investor Portals
How firms communicate fund performance or receive subscription agreements has changed drastically over the past twenty years. Gone are the days of relying on fax machines to receive completed subscription agreements. Today’s sophisticated investor seeks a more streamlined, tech-forward experience. Investment managers have responded with Virtual Data Rooms (VDRs) to share marketing collateral and secure, cloud-based investor portals to share fund performance.
The way IR teams engage with investors has evolved over the past two decades, but undoubtedly, the rate of change has increased dramatically since the onset of COVID. Streamlined, cloud-based experiences and frequent touchpoints with the investment manager are what investors seek from the moment they engage with an investment firm.