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Arman Salavitabar, CFA

Arman Salavitabar, CFA

Founding Partner, FundFront

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5 Strategies for Alternative Investment Firms to Grow

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Alternative investment firms face unique challenges in their quest for growth. Unlike traditional investment vehicles, alternative investments require specialized strategies to attract investors, manage funds efficiently, and expand their market presence. This paper explores five key strategies that alternative investment firms can adopt to achieve sustainable growth.

1. Enhancing Fund Structuring and Administration

Streamlined Fund Launches

Launching a new fund involves intricate processes that can be time-consuming and costly. Alternative investment firms should focus on streamlining these processes by partnering with specialized service providers. FundFront’s Structuring Solutions can simplify fund launches by integrating top-tier service providers, technology, and market infrastructure.

Efficient Fund Administration

Efficient fund administration is crucial for managing operational costs and ensuring compliance. Firms should leverage advanced fund administration technology to automate routine tasks, reduce errors, and ensure timely reporting. This not only improves operational efficiency but also enhances investor confidence.

2. Leveraging Global Distribution Channels

Partnerships with Global Banks and ICSDs

Alternative investment firms can expand their investor base by collaborating with international central securities depositories (ICSDs) and global banks. These partnerships facilitate the distribution of alternative investment products through established global channels, making it easier for firms to reach a wider audience.

Streamlined and Standardized Investor Onboarding

Manual subscription and investor onboarding processes can be a significant bottleneck. By streamlining and standardizing these processes, firms can reduce administrative burdens and improve the investor experience. FundFront’s Global Distribution Solutions offer standardized onboarding, ensuring a seamless investor journey from start to finish.

3. Utilizing Investment Platforms

Integration with Wealth Advisory Systems

To attract more investors, alternative investment firms should integrate their offerings with existing wealth advisory systems. This allows wealth advisors and distributors to seamlessly offer alternative investment opportunities to their clients. FundFront’s Investment Platforms provide a complete tech solution that can be plugged into advisory systems, enhancing accessibility for investors.

Enhancing Discoverability via Databases

Utilizing databases like FundFront’s HUBS platform can significantly improve the discoverability of alternative investment products. HUBS acts as a comprehensive database of bankable alternative investment products, which wealth advisors, private banks, and other distributors can access to offer their clients. This increases visibility and accessibility, leading to greater investor interest.

4. Enhancing Investor Relations

Transparent Communication

Building strong relationships with investors requires transparent and regular communication. Firms should provide detailed reports, performance updates, and market insights to keep investors informed. This transparency fosters trust and encourages long-term investment.

Personalized Investor Services

Offering personalized services can significantly enhance investor satisfaction. Alternative investment firms should consider providing tailored investment advice, customized reporting, and dedicated account managers to address individual investor needs.

5. Adapting Core Competencies to Institutional Mandates

Aligning with Institutional Requirements

Rather than diversifying into various asset classes, alternative investment firms should focus on adapting their core competencies to meet specific mandates from institutional investors. Understanding and aligning with the requirements of institutions such as pension funds, endowments, and insurance companies can open significant growth opportunities. These mandates often have unique investment goals, risk tolerances, and regulatory constraints that firms need to cater to effectively.

Developing Tailored Investment Solutions

Creating tailored investment solutions based on institutional mandates can set firms apart from competitors. This involves developing strategies that leverage the firm’s strengths while meeting the precise needs of institutional clients. By offering customized solutions, firms can enhance their appeal to large, sophisticated investors who are looking for targeted investment approaches that align with their specific objectives and constraints.

Building Long-Term Institutional Relationships

Cultivating strong relationships with institutional investors requires a deep understanding of their needs and a commitment to ongoing engagement. Regular communication, personalized service, and delivering consistent performance are key to building trust and securing long-term commitments from institutional clients. Firms should aim to become trusted partners, offering insights and strategies that align with institutional goals and adapting as these goals evolve over time.

Conclusion

Growth in the alternative investment industry requires a multifaceted approach. By enhancing fund structuring and administration, leveraging global distribution channels, utilizing investment platforms, and enhancing investor relations, firms can position themselves for success. Additionally, focusing on core competencies and adapting them to meet specific institutional mandates is an essential component of a comprehensive growth strategy.

Alternative investment firms looking to overcome growth challenges can benefit from bespoke solutions offered by specialized providers like FundFront. With expertise in structuring solutions, global distribution, and investment platforms, FundFront can help firms navigate the complexities of the alternative investment landscape and achieve sustainable growth.

For firms facing growth challenges or seeking to enhance their operations, FundFront offers tailored solutions that address these needs effectively. Contact FundFront to learn how they can support your firm’s growth journey.

Written by:

Arman Salavitabar

Arman Salavitabar

Founding Partner, FundFront

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