Internet Reputation for Hedge Funds might seem like a contradictory idea. Hedge funds are notoriously secretive. They don't like the spotlight and usually deal with small highly selective audiences. So why is reputation management important for Hedge Funds?
Despite their highly selective nature, hedge fund are always looking for investors and even a hint of bad publicity can be enough to send a prospective investor scurrying.
We tend to think of reputation management being important for restaurants or hotels or other customer or retail related businesses. But the damage is the same whether you are complaining about a noisy room or a disastrous investment.
In the population at large very few people actually deal with hedge funds. So you would think that the chances of someone complaining online would be pretty slim. This is true but don't forget, that it is not hard to get defamed. It can be a disgruntled employee—even a very low level employee—It can be an investor who lost money but more likely it can be an unethical competitor who is fighting to win the business of the same pool of investors. Defamation can come from anyplace, and, whatever its source, it is always destructive.
For Reputation Management Minded Hedge Funds the Keyword is Caution
Where any company that values its reputation is advised to run their business to avoid direct conflict with employees, customers or shareholders, Hedge Funds have to be even more careful.
Hedge fund firms are prevented by federal regulations from marketing themselves directly to investors, so people in hedge fund marketing jobs work for dedicated companies that perform the necessary task of informing potential investors about the investment opportunities provided by the hedge fund, as well as providing recommendations for the firm and expectations as to fund performance
Even though hedge fund marketing is indirect, the process still involves a number of personalities and very one of them should be considered a potential source of bad publicity. This is a problem in an industry, which is inhabited by huge egos, many of which do not always take the time to be respectful of subordinates. But the truth is that it is precisely the lower level people—those who have little to lose, who are most likely to take their grievance to the Internet.
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