Competition in Asset Management: Good Ideas vs. Good Marketing

You need money to make money, right? The same 10% return looks and feels very different for a one million dollar investment vs. a one billion dollar investment. Not surprisingly, the competition in the asset management industry for investors’ assets is fierce – there is a lot at stake. How does one convince a potential client to invest in your investment vehicle? Keep in mind that the investment would be made on an implicit promise of future performance, which, by the way, will only materialize after the investment decision is made. Even then, it may require several years of data to truly assess its performance. How do you convince a wary client that the future is bright and that his/her money will be well taken care of? Are you truly sure that the performance of your strategy a few years down the road will meet the needs of the client? Most importantly, how do you differentiate your investment vehicle from others who could be making outlandish claims about their funds’ expected future performance?

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