Forget the fudge: give it to investors straight when funds perform poorly

Effective communication with institutional investors could be the difference between retaining and losing clients. (Image by rawpixel from Pixabay.)

Institutional investors want to hear from fund managers more when their funds are performing poorly, according to a new study from CoreData Research.

No surprise there. Now for the tricky part.

Asset managers’ ability “to communicate effectively and regularly with institutional investors” could be the difference between retaining and losing clients, says Craig Phillips, head of CoreData Research International.

“Tell the truth. Perhaps you think you do. But is it the unvarnished truth?”

Regular communication is easy to organise. But how can you ensure that communication with your institutional (and retail) clients is effective when your fund is performing poorly?

May we suggest that you follow two simple guidelines? Both are maxims that your grandparents probably taught you but that often get forgotten in business.

First, tell the truth. Perhaps you think you do. But is it the unvarnished truth? Our fund performed poorly last month. Or is it a fudgy half-admission? The fund has seen strong headwinds. Performance was impacted by negative allocation effects.

“Fund managers write about ‘the fund’ as if it were an alien being that had landed on their desk from outer space.”

Second, take responsibility for your fund. Own it.

Often, fund managers write about “the fund” as if it were an alien being that had landed on their desk from outer space. They do that even when it’s doing well. When it’s doing badly, they push the dreadful creature away from them. Aargh! Nothing to do with me.

No one expects a fund to perform brilliantly every quarter, but they do expect to understand why it has performed poorly. You know why; it’s your fund.

So, give it to them straight. Tell your investors what happened and why in clear and simple terms. Be honest. And be personal. Talk about our fund, our performance.

They are sure to thank you. And they might stick with you as well.

Fall in love with full stops

Pen writing
In business writing, people typically do not use the full stop enough. (Image by Free-Photos from Pixabay.)

The full stop is such an important and powerful punctuation mark that it has been incorporated into spoken English. When dumping a lover, you might say, “I never want to see you again. Full stop.” That means never, ever. The spoken full stop adds emphasis.

The written full stop can do this too. On social media, splitting phrases into one-word sentences is a popular way of making a point.

“Short sentences are clear, compelling and authoritative”

If you end relationships by Tweet (and we’re told some people do), you might Tweet your ex, “I. Never. Want. To. See. You. Again.”

In business writing, people typically do not use the full stop enough. It’s almost as if they think that short sentences are unprofessional.

Nothing could be further from the truth. Short sentences are clear, compelling and authoritative.

If you are writing about a technical topic, long sentences make it harder for your readers to follow what you are saying. That’s one of the reasons why they are so popular; they provide cover for you, the writer.

In short sentences, there is nowhere to hide. You must command your material.

“A good piece of writing usually contains a mix of very short, short and longer sentences”

Of course, you don’t want all your sentences to be very short. That can feel like machine-gun fire.

But a good piece of writing usually contains a mix of very short, short and longer sentences. So, the next time you find yourself writing a string of long, rambling sentences, stop.

Then reach for one of the most powerful weapons in a writer’s toolkit. The full stop.

Why do we write?

Unless you are writing a literary work, which is a form of artistic expression, your purpose in writing is usually to inform or persuade your audience. Often, you want to do both.

In the fund industry, certainly, informing and persuading the intended audience is the aim of almost every piece of writing that is produced. It’s good to remember this when you sit down to write.

“The purpose of writing is to inform and persuade your audience”

If you remind yourself that the purpose of writing is to inform and persuade your audience, you can avoid many common writing mistakes. The first and perhaps most lethal of these is to ignore your audience.

If you want to convince your readers, it’s obvious that you should have some idea who they are. It’s equally obvious that you should think about what interests them and that you should try to avoid confusing them or boring them to death.

“A lot of business writing is not suitable for the intended audience; sometimes, it’s not suitable for any audience”

These points are obvious, but writers often don’t address them, particularly in a business context. A lot of business writing is confusing and boring. Often, it’s not suitable for the intended audience; sometimes, it’s not suitable for any audience.

Perhaps it is encrusted in arcane jargon. Perhaps it is lifeless because all the sentences are structured in the same way. Perhaps it fails to engage the reader because it is too impersonal.

These are all problems that can be fixed. The first step on the way – and the best way to avoid these problems in the first place – is to remember why we write.