Star Personalities
It’s not just about games and dress-up. In a throwback to the days when successful hedge-fund managers were known far beyond Wall Street, other smaller issuers are leveraging the personalities and knowledge of internal experts to promote their funds.
One prominent figure is Cathie Wood, the chief executive of ARK Investment Management, who’s made a name for herself buying Bitcoin and making bold calls on tech companies like Tesla Inc. Wood currently has 32,000 Twitter followers, and the firm uses a combination of tweets, blog posts and podcasts to promote its work.
So does $11 billion Global X Management Co., which has trademarked the term “conversational alpha” to describe how thematic funds can boost an investor’s experience. And Alpha Architect, which manages about $420 million from the suburbs of Philadelphia.
“When we write a post, that’s really the lifeblood of what we do,” said Wes Gray, the Pennsylvanian firm’s founder. “We use Twitter as a way to interact with people.” Gray has more than 30,000 followers on Twitter.
That said, there’s still some room for smaller asset managers to differentiate themselves using more traditional methods -- if they can stomach it. Social Finance Inc. made a splash with plans for the first ETFs that cost nothing in February, while Salt Financial offered to pay investors to buy its fund.
But the challenges faced by these issuers has piqued regulatory interest. The Securities and Exchange Commission wants small and mid-sized firms to weigh in on whether the cost and burden of regulatory compliance is creating barriers to competition, and Dalia Blass, director of the SEC’s division of investment management, has expressed concern that the variety of funds offered by smaller issuers could be “lost in a wave of consolidation and fee compression.”
For Salt co-founder Alfred Eskandar, whose firm complained of anti-competitive practices that favor larger issuers in a letter to the Federal Trade Commission in January, the SEC’s probe is a step in the right direction.
“The SEC has a lot on its plate, and it will move at SEC pace,” he said. “I’m not sure when will see something material there, I’m just happy they have put it on the calendar.”
This article was provided by Bloomberg News.