Nearly all fund families have a flagship. When leveraged properly, it can help propel and support a mutual fund/ETF manager's business for years to come. In some cases, a manager's flagship is not the first fund he launched or even the strategy he thought was his strongest. Rather, it's typically a result of a marketing strategy combined with the right sales approach to ultimately create the vehicle for which the manager is best known.
Benefits of the Flagship Approach
Whether it's a specific fund, marketable philosophy or investment strategy, having a defined flagship can be a major growth driver for ETF and mutual fund managers. Platforms add new funds when there is sufficient advisor demand; therefore, a recognizable (and reputable) fund family can go a long way in attracting advisors, and thus platforms, by cross-selling new funds based off the merits of its flagship. A recognizable flagship approach also provides the sales team with a consistent and identifiable pitch to reinforce brand name and fund objectives with investors.
Identify Your Flagship
The flagship does not have to be the strategy a company was originally built on or its first product to market. In fact, it may even be a result of factors beyond the firm's immediate control. Recently, we have seen numerous ETF managers launch suites of strategies and subsequently find that the fund they anticipated would be the flagship was not the most popular nor did it garner the most market prominence.
Many factors can influence which fund gathers the most initial assets, trading volume and general recognition. For example, changes in the economic environment beyond the control of fund managers can shift investor preferences for different sectors. Those that are the most nimble or innovative, though, can capitalize by shifting their marketing story to highlight the qualities of the firm's flagship fund.
To help identify their flagship, there are some simple questions that fund managers can ask themselves:
* What is the firm's core competency? If a fund family is built around a certain style, characteristic or industry reputation, the flagship fund shouldn't stray too far from this. For example, banks and trust companies are more commonly recognized for their fixed income and credit experience than their equity expertise. Building a marketing strategy around this perception could benefit the firm's entire suite of strategies, particularly if the investment management team can illustrate how their traditional fixed income experience gives them an edge in managing more esoteric bond-like strategies or even equities.
* What fund is gathering the most assets? Examine the flow of assets and the circumstances that are driving it. Data analysis can help identify the fund's core investor base. If the strategy is being picked up in the 401(k) market, for instance, consider the key attributes that consultants are most interested in when recommending a fund to a plan sponsor. Understanding these details can help managers create a more focused and compelling institutional presentation.
* What investment strategy is getting the most financial press? A focused PR effort around a strong fund at the right time can help elevate a fund to flagship status.
* Where is the market trending? The key is to be forward-thinking and understand how the market might benefit from the firm's investment philosophy a few months or even a few years down the road. It's important to look at where the market is heading and position the fund for the cycle.
Making the Most of the Flagship
Once a manager identifies their flagship product, it becomes crucial to maintain momentum with a targeted sales and marketing strategy.
* Cultivate one voice. Wholesalers should all lead with the same features and benefits of the flagship vehicle, and the website, conference and event presence, and marketing materials should follow suit. Create training programs that reinforce the themes of the flagship fund and offer wholesalers fresh sales strategies that play to the current market.
* Promote the features that pique investor interest. Fund families are utilizing a lot of resources to identify prospective investors. Using data to identify the fund's typical or ideal investor can help develop meaningful messaging that speaks to the features and benefits of the strategy. Reinforcing the features that are most important or valuable creates more loyal investors and attracts new ones with similar characteristics.
* Leverage subject matter experts. Portfolio managers and other experts can produce thought leadership content, from sharing insights in high-level white papers to speaking at industry conferences, to help build name recognition for their specific fund(s) and firm. It is important to ensure that the content delivered by subject matter experts ties in with the key characteristics of their firm's flagship idea or fund.
* Develop a targeted marketing strategy. Promote the flagship through email campaigns and webinars. Keep content fresh by positioning the fund within the current market environment to encourage regular readership and attendance.
Put It to Work for the Entire Fund Family
Using the flagship as a core building block and marketing catalyst can greatly benefit and support the other funds in the family and products managed by the investment manager. It becomes especially important to shift the focus onto other products when the flagship fund is closed to new investors. Using the flagship story to create or increase interest in other strategies can also help to diversify your client base and help maintain consistent inflows into your entire lineup.
The concept of a flagship fund is grounded in the competitive nature of fund marketing. By coupling brand recognition with a nimble and focused marketing strategy, mutual fund and ETF managers can raise the awareness of their entire fund families with the success of the flagship.
Jonathan Dale is distribution director for SEI's Investment Manager Services.