AM 20/20's Amanda Tepper and Brandon Gersch provide Navatar exclusive research into institutional investor wants, broken down by LP type, to help asset managers refine their fundraising and investor relations strategies.

1. Webinar: Segmenting the Investor Community to
Boost Fundraising

2. Segmenting the Investor Community to
Boost Fundraising
Today’s Speakers
Amanda Tepper
President – AM 20/20
Brandon Gersch
Advisor – AM 20/20
Insights from AM 20/20’s proprietary research among institutional investors
and investment consultants.
Nicholas Donato
Industry Specialist – Navatar
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3. Connected Growth Platform
Helping600alternativeassetsfirmslead,notlagcompetition

4. Investor Research: Survey Methodology
• For every AM 20/20 investor research project, we speak with CIO or equivalent
professionals across the government, corporate, endowment/foundation and family
office sectors.
• The data below is from a recent study in which we conducted phone interviews with
98 institutional investors from all market segments and fund sizes who collectively
manage over $1.1 trillion.
• 35% of interviewed investors have 20+ years of experience overseeing plan assets.
50%
26%
13%
11%
Institutional Investors
Government
Corporate
Endowment
/ Foundation
Family
Office
38%
36%
26%
Assets Managed
$5B+
$1-4.9B
Less than $1B
35%
29%
21%
15%
Years of Experience
20+
10-19
5-9
1-4
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5. Top Five Factors Driving the Decision to Hire An Asset Manager
Investor Trust = AUM
% of respondents rank as
important
1. Strong understanding of the firm’s investment process 95%
2. Asset manager credibility 89%
3. Strong understanding of the firm’s risk management 82%
4. Clear and consistent communications 77%
5. Confidence in the firm’s business structure and incentive 77%
Source: AM 20/20, Chestnut Advisory Group
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6. Different Investors Have Different Concerns
86%
54%
44%
20%
29%
39%
78%
80%
21%
32%
11%
20%
14%
18%
33%
20%
14%
33%
Corporate Plan Sponsor Government Plan Sponsor Endow/Found Family Office
Interest Rate Risk
High Volatility Correlation
Portfolio Liquidity
Inflation Risk
Currency Risk
Percentage of Investors Highly Concerned about These Portfolio Risks
Source: AM 20/20
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7. Wide-Ranging Sources of Rate Concerns
•Governments are driven by worries about overall portfolio performance and fixed income exposure
•Corporate plan managers’ rate worries stem from concerns about their plans’ funded status
•Well under half of respondents use an investment product to help manage their rate risk
33%
30%
23%
17%
0%
5%
10%
15%
20%
25%
30%
35%
Portfolio Exposure to
Rising Rates
Fixed Income Exposure to
Rising Rates
Impact on Funded Status Other
Reasons Why Interest Rates Are the Single Most Pressing Risk
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8. How Correlation of Volatility Tops Endowments’
Worries
Eighty percent of Endowments, Foundations and Family Offices polled name asset
volatility correlation as a major source of disquiet
Differing Reasons for Volatility Worries
• Although the risk of a large portfolio drawdown was
the top concern amongst all investors, the following
are also material concerns among many others:
• Endowments and Foundations worry about
the interconnectivity of global capital markets
• Government funds worry about the ability to
diversify, as many choose to take on less return
in exchange for less risk. Being too “growthy” is
far too risky
• Corporates worry about the ability to continue
to maintain optimal portfolio mixes
27%
20% 20%
13%
0%
5%
10%
15%
20%
25%
30%
Drawdown Risk Smoothing
Returns and
Risks
Ensuring
Minimal Risk
Overlap Among
Managers
Global Marekts
are Highly
Correlated
Reasons Why High Portfolio Correlation
is the Single Most Pressing Risk
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9. Different Investor Segments Use Hedge Funds to
Meet Their Different Needs
78%
60%
27%
44%
56%
37%
73%
67%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Corporate Government Endowment /
Foundation
Family Office
Portfolio Diversification Risk Mitigation
67%
55%
45%44%
55%
82%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
$5B+ $1-4.9B <$1B
Portfolio Diversification Risk Mitigation
Most Important Aspect of the Role of Hedge Funds
in Investors’ Portfolio by Investor Type
Source: AM 20/20
Most Important Aspect of the Role of Hedge Funds
in Investors’ Portfolio by Fund Size
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10. Family Offices Most Likely to Allocate
Additional Capital to Hedge Funds
32%
57%
85%
82%
24%
33%
38%
73%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Corporate Government Endowment / Foundation Family Office
Currently Invest in Hedge Funds Plan to Invest in Hedge Funds
Source: AM 20/20
Capital Allocation to Hedge Funds by Investor Type
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11. Fees Are Not of Primary Importance in Manager
Selection
• Only 41% of respondents place fees among the
top three factors they consider in manager
selection.
• Only a quarter of respondents take fees into
account during the initial screening process.
• Corporate DC plan sponsors are by far the
most price sensitive:
– Three-fourths of these respondents
ranked price as a top three factor in their
hiring decisions
– The same number focuses on pricing
during initial stages of search process.
1%
41%
35%
20%
Price as a Factor in Hiring an Asset Manager
The single most
important factor
you consider
One of the
top two or
three factors
An important
consideration
An important,
but second tier,
consideration
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12. The Largest Investors Negotiate Fees The Most
• Almost half of all the larger funds (over $5
billion) we spoke with say they “always”
negotiate on fees.
• “We’re [one of the largest funds] in the
US, so we throw our weight around.”
— Government Fund Manager
• Investors who negotiate fees generally
secure a 10–15% discount from
managers’ stated fees. 48%
32%
13%
14%
12%
4%
$5B+ $1-4.9B <$1B
Frequency of Price Negotiation in
Hiring an Asset Manager:
By Value of Funds Managed
More than half the time Always
“We get most-favored-nations so
whatever they are giving to their other
clients we seek the same treatment.”
— Endowment CIO
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13. Consultants Want Insight and Understanding,
Not Data
“Good
communication
and smart people.
That’s all we
need.”
-Investment Consultant
“In my entire 30-
year career, I don’t
think we’ve fired
more than ten
managers for
performance
reasons. It’s all
the other stuff.”
-Investment Consultant
0%
17%
43%
65%
78%
83%
87%
0% 20% 40% 60% 80% 100%
Regular updates/insights on the
capital markets
Highly capable marketing
representative
Clear, understandable marketing
materials
Regular updates on firm developments
Strong intellectual capital
Clear performance discussion and
analysis
Direct meeting with senior PMs
Top Factors Driving Consultant Trust in Asset Managers
Source: AM 20/20
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14. AM 20/20’s Recommended Action Steps
for Segmenting the Investor Community
• Asset managers should invest resources to identify their bullseye target investors
• Asset managers should focus their marketing message around their attributes that
best address the needs of their bullseye target investors
• Asset managers should NOT focus their message on their performance track
record
• Educating consultants is a must for asset managers
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15. AM 20/20 is a Community That Establishes Business
Development Best Practices for Asset Managers
Peer-based Insight
Institutional Investor Insight
• Investor Research - Every 4-6 weeks we interview institutional investors and
consultants on topics that are vital to any asset manager’s success, such as:
• Investors Want Hedge Funds to Hedge
• What Consultants Really Want
• How to Get Hired More Quickly
• Peer Research - Each quarter we contact hundreds of business development and
marketing professionals at leading asset managers on topics such as:
• Performance Discussion Best Practices
• Key Investor Departures
• Thought Leadership
• Join the AM 20/20 Community
• Members’ Roundtables: December 1, New York – How to Get Hired More Quickly
• Quarterly Members’ Webinars
• Custom Webinars, Research and Training
Actionable insight derived directly from institutional investors, consultants, and peers.
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16. Questions?
All content and material contained in this document is protected by United States copyright law and is the exclusive property of AM 20/20 LLC and may
not be reproduced, distributed, transmitted, displayed, published or broadcast without its prior written permission.
To learn more about AM 20/20, please contact Brandon Gersch.
Email: bgersch@am20-20.com
Phone: 203-293-1722
To learn more about Navatar, please contact Nicholas Donato
Email: ndonato@navatargroup.com
Phone: 212-863-9655 X 3662
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