Researcher Preqin in their research findings of 100 institutional investors in private equity, real estate and infrastructure, show that there exists a major disconnect between what information fund marketers are providing at the initial marketing stage and what investors wish to see.
The main source of grief reported was that investment performance information was, “poorly presented with too much superfluous information is provided with 72% of potential investors said the way the fund’s performance or the fund strategy track record was described was average or worse”.
Preqin reported that the missed investment opportunity for fund promoters seeking to raise capital is due to institutional investors are on average presented with 35 closed-end private equity fund marketing documents per quarter, up from 31 in 2012.
However 52% of institutional investors surveyed considered it imperative to be able to directly compare initial fund documentation of various vehicles with each other while 56% stated that they currently find it difficult to do this using the information provided.
Preqin’s head of investor products Stuart Taylor, said, “our conversations with investment managers and investors has revealed that many fund marketers fail to get past the hurdle of initial fund documentation because their marketing materials do not align to investors’ investment criteria or are lacking crucial data, overloaded with unnecessary information and, particularly in relation to track record, are often viewed as misleading.”