Real Talk with Sasha Jensen of Context Jensen Partners

Jun 19 2017 | 10:31am ET

Today, FINalternatives sits down with Context Jensen Partners founder Sasha Jensen to discuss the challenges of recruiting in the alternatives space, her outlook for the hedge fund industry, and a deep dive into the company’s Hedge Fund Marketing Power Index.

Jensen leads a team of recruitment specialists dedicated exclusively to capital raising executive search. Prior to founding Jensen Partners (formerly HFE Search), Sasha Jensen was the Director of Alternative Asset Management Recruiting for The Gerson Group in New York and London, where she specialized in placing marketing teams for hedge funds and investment banking platforms.

Sasha Jensen established Context Jensen Partners on the idea that a need existed for a strategic, data-analytical methodology to placing asset raisers. Jensen created an investor database that would offer her clients quantitative as well as qualitative insights on who the best marketers are across all strategies.

Today, that database is global and includes 4,000 investors across all alternative strategies. The firm’s successful track record of Jensen’s commitment to competitor intelligence market mapping of all distribution platforms. We have more than 600 firms mapped out and growing.

FINalternatives: How did you get into the recruiting business in the alternatives space?

Sasha Jensen (SJ): I started my professional life as a journalist, working on Fleet Street and then as head of investigations for the Sunday Independent in Johannesburg. When I got back from South Africa to London in 2000 I was introduced to the CEO of a finance search firm who suggested that my background as an investigative journalist—and my ability to connect quickly with people—would be complementary to a career in recruitment.

I took that advice and, after a series of roles at other recruitment firms, I started my own firm in 2013; Jensen Partners, a firm that’s exclusively dedicated to the placement of capital raisers and teams globally. To elevate the platform and its research product I sought an investor in Context Capital Partners in December 2015, and we became Context Jensen Partners.

FIN: With respect to hedge funds, what is your take on the overall growth of the industry?

SJ: I’m bullish on the future of the hedge fund industry, particularly as a source of differentiated returns and downside protection for investor portfolios. To be sure, the industry has hit a few speedbumps, but the overall trajectory continues to be positive. While some of the larger firms have suffered performance issues, there are a wide range of mid-sized players who have successfully raised assets and generated alpha. We expect inflows to continue for these firms, especially from institutional investors and family offices, as the industry matures. 

FIN: What led to the inception of the Hedge Fund Marketing Power Index?

SJ: We wanted to develop a more rigorous, quantitative approach to the evaluation of fund marketers. It’s one thing to just rank the firms that raised the most assets, but we wanted to get a complete picture. The alternatives industry tends to only focus on the largest firms. As a result, we wanted to develop an empirical methodology that accounts for both size and performance, and attempts to level the playing field.

FIN: What’s the methodology behind the rankings?

SJ: We looked at hedge funds with a minimum of $500 million in assets under management, using data from Preqin’s hedge fund database, and measured for each firm the total assets raised and the difficulty of raising those assets between January 2015 and January 2017. Only hedge fund firms that were included in the Preqin data were considered for the rankings.

FIN: What have the initial rankings uncovered?

SJ: There’s no one-size-fits-all approach to good marketing. And we knew going in that any formulaic approach to evaluating marketers would ignore many of the critical factors that make a firm successful at capital raising. We also understood that any formula would necessarily be flawed through underrepresenting or ignoring these soft factors, such as a firm’s brand value, industry competition, product innovation, product type and the structure of the team.

This index confirmed our conviction that marketing is a fundamentally qualitative process that largely depends on interpersonal interactions between individual players. This is unlikely to change, and we believe the firms most likely to have success going forward are the ones that utilize a thoughtful, long-term marketing strategy that includes high-touch client service and a well-maintained distribution network. We also believe that having a quantitative metric is an important step towards enhancing the evaluation of marketers, and we look forward to refining this concept further as we continue to collect feedback.

FIN: What traits makes a successful marketer for alternative asset managers?

SJ: The industry has matured over the last 10 years, and especially in the last couple of years, as more investors have started demanding a high-touch level of client service. Our clients are demanding that we recruit marketers with deep technical ability, able and willing to talk through the portfolio 24/7.

For marketers, success isn’t just measured by the total amount of assets raised anymore. Marketers need to be able to cultivate and maintain stronger relationships with investors. That requires an in-depth understanding of the firm and of each strategy, and an ability to navigate everything from negative headlines to market shocks to crisis management. Even the slightest hint that a firm is struggling could lead to a surge of redemptions, and it’s increasingly the responsibility of marketers to make sure investors are kept up-to-date on what is happening with their assets.

FIN: We recently discussed why niche strategies are so important in today's industry. Are you seeing more demand for other niche strategies?

SJ: There’s a growing consensus in the alternative investment industry that increased competition has led to overcrowding in positions and therefore diminished returns. This is a large part of why a significant percentage of recent inflows are going to niche strategies. Investors are constantly on the hunt for alpha, and niche strategies offer access to markets that have not yet been picked clean.

FIN: What are the opportunities and challenges of marketing niche alternative strategies?

SJ: The biggest challenge is the lack of an easy-to-use benchmark. Many investors rely on benchmarks to evaluate how managers are performing, and for many of these niche alternative strategies there just isn’t an appropriate benchmark. It’s on the marketing team to clearly explain how a strategy might perform under different market conditions. If you don’t over-promise, you can’t under-deliver.

On the other hand, the opportunity is that investors today are very open to hearing new ideas. It’s up to the marketer to make the investor feel comfortable, which will usually mean a small initial allocation until there is more of a track record.

FIN: Where else are you seeing demand?

SJ: We’re seeing a lot of interest in quantitative investment strategies. Quants have been the flavor of the month for a couple years now, and we don’t see that changing as technology continues to improve.

Other strategies that are drawing a lot of demand include private credit, ESG and real assets, including real estate and infrastructure. These are all fairly nascent markets, but they’re growing quickly as investors look to diversify beyond stocks and bonds. We’re also seeing a lot of interest in multi-asset strategies, which give investors a convenient way to access multiple markets simultaneously.

Private equity is another area where there is a lot of demand right now. In our Q1 newsletter, which includes data on marketing moves across the alternative investment industry, we highlighted how private equity marketing hires hit an all-time high in the first quarter, following a very strong 2016. We are seeing very strong hiring for Q2 also – our newsletter is out at the end of June.

FIN: While private markets fundraising remains strong in the US and Europe, have you seen any of these firms look to Asia to expand their distribution platforms?

SJ: We are seeing an interesting uptick in distribution hiring in Asia. LPs are talking about investment in the continent and our firm has taken on a number of Asian mandates recently. The U.S. and Europe are definitely still the leaders when it comes to the alternative investment industry, but there is growing interest in other parts of the industry. China is still in the very early stages of opening up its market to private investors, and there are a number of large hedge funds that have already registered China-focused units. Then if you look at Singapore and Japan, those countries are home to some of the most sophisticated institutional investors in the world, with extensive experience investing in alternatives. So the appetite is there, but as with any new market, adoption is likely to be slow at first. Marketers with contacts in Asian markets are constantly in high demand.

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