Living Inside the Box
Large corporate culture conditions us (in the American business community) to strive for “thinking outside-the-box.” When was the last time you were brought into a conference room and told, “Ok, we’re going to think outside-the-box?” My money is on this happening to you at least once in 2011. There’s nothing inherently wrong with outside-the-box. It speaks to some desire for differentiating a product, service, or process. In marketing initiatives, there’s often a desire to have out-of-the-box communications.
Through recent FA and institutional investor interviews, I’m learning the value for investment managers to communicate inside-the-box. Consider the box as strategy, asset class, or categorization a fund (or fund family) is matched to.
Repeatedly, I hear advisors and institutional investors match strategy with fund family when discussing investment selection. A frequent (and immediately delivered) comment sounds like this, “Well, for intermediate bond I’ll put a client in Pimco Total Return. For equity exposure to the Pacific, I allocate to the Vanguard Pacific ETF.” That’s not to say Vanguard or Pimco are dominant or superior to other providers. What I ascertain is that those firms have defined their expertise in intermediate bond strategies and the Pacific Rim, respectively. So much so, many advisors simplify their practices by matching those funds to those categories,
Perhaps this is a straightforward approach to consider.
- Define your fund box – communicate how your clients should categorize your fund
- Clarify how this box is important – answer (to all prospects) why anyone should care about this box
- Build a reputation – work day and night to communicate why your fund is great inside that box
Obviously this is easy to speak about and difficult to execute. But with small steps and consistent input, you could evolve your target audience’s thinking to put your fund “inside-the-box” and hopefully keep it there.
This process (I use that loosely) seems to have worked for Warren Buffet who defined his box as value investing (specifically the Graham and Dodd investing models), spoke for decades about the enduring principles of value investing, and then built his reputation as the world’s leader.