When Derwent Capital Markets launched Europe’s first social media-based hedge fund in May 2011 to great fanfare, observers believed this might open the floodgates of social media adoption by hedge fund managers.
Curious about possible trends, we researched the social media adoption levels of 77 hedge fund managers globally, each with at least US$1.0 bn in assets under management. The MHP Hedge Funds and Social Media Survey 2011 found that hedge fund managers are ignoring social media. 8% of hedge funds are still without a corporate website, let alone a Twitter feed or a Facebook wall.
The anticipated flood of social media adoption turned out to be just a trickle of, most of it through leakage rather than active embrace.
We discovered that only 1% of the 77 hedge funds are active on Twitter, 3% have their own channel on YouTube and none have a wall on Facebook. However, 23% have an active presence on LinkedIn.
The findings did not surprise us. Historically, hedge fund managers have deliberately kept a low profile and managed their reputations accordingly. They are also concerned about the regulatory implications of social media. As such, adoption of social media is extremely low.
In the short term, this is not an issue as social media at an institutional level in the asset management industry is in its infancy and very much in ‘broadcasting’ rather than the more interactive mode for which it was intended.
However, social media is an emerging communications channel for hedge fund stakeholders. There is a widening gulf between the very private environment in which hedge fund managers communicate and the public way in which their stakeholders communicate.
Many current and future employees are using LinkedIn as a communications medium, a medium that is relatively benign in terms of exposure for firms, once they have taken control of their corporate brand names on LinkedIn. This is a theme of an FTfm blog ‘Hedge funds seem anti-social’.
In terms of clients, some of the world’s largest pension funds such as CalPERS (@calpers) and CalSTRS (@mycalstrs) are communicating through Twitter including tweeting and following funds as well as engaging with a range of audiences via Facebook.
Another stakeholder group, journalists in financial services media, are fast becoming social media aficionados. These examples do not take into account the personal use of social media by hedge fund stakeholders as they communicate and consume information digitally on iPads, tweet, etc.
Hedge fund managers should start using social media more actively as additional channels through which to communicate and build lasting relationships with their stakeholders and to develop the reputation of their firms. Taking control of their content by becoming the best provider of it is important. Hedge fund managers should also look at social media initiatives in the wider asset management community for inspiration.