‘You say it best, when you say nothing at all…’
So sang Ronan Keating in his 1999 chart-topping hit of roughly the same name – the idea was that the singer’s beau could make her love known through non-verbal communication.
Some fund managers also seem to think this same logic applies to communicating with their investors.
When marketers ask these types of managers to communicate on a given topic, the answer may well be one of the following:
- “I’m too busy”
- “I have a day job to do”
- “My performance isn’t great, so I don’t want to say anything”
- “My performance is great, so I don’t need to say anything”
Or, just simply:
- “No”
All of which might be fair excuses, but the one that gets trotted out most often is also the most bizarre argument for not communicating:
- “I don’t want to say anything about that stock I do/don’t hold, as I might be wrong and someone will tell me in six months that I was.”
I’d argue that this is counterintuitive on a number of levels.
Investors want to understand how fund managers think
First, fund managers are paid the big bucks to have a view on a company which fits the criteria for their investment portfolio. It is, by definition, their job.
Second, this is exactly the kind of thing retail investors want to hear about.
Not necessarily so they can go out and buy the company for themselves, but so they can better understand the investment skills and thinking of the fund manager and assess whether or not their view of the world accords with their own.
Go to any investment trust AGM and you will see the eyes of the audience light up when the manager gives examples of stocks in the portfolio.
There is a lesson for investor communications here: the detail that a fund manager might regard as too specific can be precisely what makes the investment approach tangible to the person whose money they’re managing.
Investor communication matters even more when things go wrong
Retail investors also want to know what’s going on with their money.
And communication shouldn’t be limited to the winners and the times when things are going well. When times are hard, keeping investors informed can be even more important.
Nobody wants to wake up one morning to discover their investment is in a large percentage of illiquid unlisted companies that keep going pop, especially if that’s not what they thought they were buying at the outset.
Similarly, if an investment case for a company turns sour, a mistake was made or a company decides to shut up shop, these are all good reasons to communicate with investors.
OK, it might appear like bad news. But better that there are no surprises.
At least the fund manager can be on the front foot, explaining what’s happened, what they’ve learned and what they’re doing about the situation.
Silence creates a vacuum. And investors are perfectly capable of filling that vacuum with their own conclusions.
Fund manager commentary can demonstrate investment expertise
There’s another reason for fund managers to communicate regularly: it provides evidence of how they actually invest.
An investment philosophy written on a product page can tell an investor what the process is supposed to be. Commentary on individual holdings, portfolio decisions and changing market conditions can show that process in action.
Why did you buy a company? What did you see that the market didn’t? Why do you continue to hold it? What changed when you sold?
That kind of fund manager commentary gives investors a window into the thinking behind the portfolio.
It also makes investment communications more interesting.
Market outlooks have their place, but investors don’t only want to know what a manager thinks about inflation, interest rates or the economic environment. They also want to understand how those views translate into actual investment decisions.
Good investor communications can also improve search visibility
There’s also a good technical marketing reason to have a public view on companies in the portfolio – or those that aren’t, and why they aren’t.
If that view is published as useful, indexable content on your website, search engines have an opportunity to surface it when people look for information about that company or subject.
Done well, a fund manager’s view on XYZ Plc can therefore introduce a new audience to the investment firm’s website.
But the opportunity is bigger than simply generating another page view.
Someone searching for a company may discover a genuinely interesting perspective from a fund manager, learn something about their investment approach and go on to explore the fund or investment trust behind that thinking.
That’s a much more useful role for investment content than publishing commentary simply because the content calendar says something needs to go out this month.
Fund managers are already communicating through their portfolios
The final reason to say something, not nothing, is the fact that, whether they like it or not, fund managers already are.
By buying, holding, not holding or selling a stock, you’re already telling the end investor that you have a view on that company.
You bought it because you believe its shares will increase in value over time.
You hold it because you think there is further to go.
And you sold it because you think there isn’t.
Why not add some colour to that and explain why?
So, are you communicating with your investors enough?
Effective investor communication doesn’t mean commenting on every market movement or producing content for content’s sake.
It means giving investors a better understanding of what they own, how their money is being managed, and the thinking behind the decisions being made on their behalf.
That matters when performance is good.
Arguably, it matters even more when it isn’t.
And in an age of hyper-communication, is saying nothing at all really an option, Ronan?
If you would like to find out how Hub can help develop your investment marketing and investor communications strategy, get in touch to arrange a call.
Author Simon Longfellow is an expert in investment marketing with over 25 years of experience working within the financial services industry. He is the Independent Director of Electric & General Investment Fund, and a non-executive Director of Columbia Threadneedle Global Managed Portfolio Trust – an investment trust investing in other investment trusts to provide shareholders with either growth or a regular income.
