8 Strategies for Creating a Compelling Investment Story

8 Strategies for Creating a Compelling Investment Story

Many asset management firms I work with ask me to review their marketing and sales strategies, pitchbooks, collateral materials and website content to find ways to improve them. Beyond the stale look, I often find “marketing symptoms” that point to a much larger malady—an outdated, undifferentiated, or poorly communicated investment story. To address these issues, I recommend eight strategies firms can use to get their stories straight.

1. Build a Comprehensive Story

 An effective investment story isn’t about a single fund or strategy. It’s not a description of daily operational processes. It’s not a branding statement or value proposition. It’s not business as usual. Rather, it’s a comprehensible and compelling narrative that explains:

  • The specific investment results the firm wishes to achieve and how it can fit in a portfolio;
  • The strategies and methodologies the firm uses to achieve these results; and
  • The qualifications and resources of those responsible for implementing these processes.

2. Be Consistent

When asset managers don’t have their investment stories straight, confusion results, which can often lead to lost business and reputational risk.

For example, one asset manager hired me to conduct a media review to see how the company was portrayed in the financial press.

I discovered one article in Barronsdescribing the firm’s “three-step-investment process.” A different article in Investor’s Business Dailyportrayedit as a “four-step process” that contradicted the other story.

On the website of another client, the investment process page positioned their team as “bottom up stock pickers,” but most of their fund commentaries and press coverage focused on “top down” macroeconomic issues influencing their decisions.

In my experience, I’ve found that several recurring reasons why members of a firm aren’t on the same page in terms of understanding and communicating a firm’s core investment story:

  • The story was created a long time ago and has been largely forgotten as the firm has evolved andpersonnel have changed.
  • The story was originally created in a vacuum by senior management and hasnever been fully validated by or explained to members of the firm.
  • The investment story has changed, but it hasn’t been properly communicated internally and externally or fully updated in the firm’s sales and marketing materials and web site.

Given that advisors and institutional investors conduct web searches and read stories about the firms they’re researching, it’s critical for firms to use a consistent narrative to avoid credibility issues.

Be Convincing

Even firms that consistently communicate their investment story aren’t necessarily telling the right story, or one that resonates with target audiences.

Effective investment stories offer a convincing narrative where a central assertion is supported by evidence. The investment team should be able to clearly explain what they wish to achieve, how they aim to achieve it, and why they’re uniquely qualified to do so. Here’s a hypothetical example of statements that might comprise an investment story.

  • Thedesired results:“Our investment process aims to deliver positive returns under all market conditions
  • Thestrategies and methodologies: “We strive to achieve this goal by identifying and making long-term investments in stable, well-managed companies in selected sectors that have a history of generating net revenue during recessionary periods and growing profits during times of economic recovery and expansion.”
  • Thequalifications:“We identify opportunities by leveraging the experience of portfolio managers who have managed sector-specific portfolios and analysts who have held financial management roles within companies in the industry sectors we focus on.”

When working with clients on developing or revamping their investment stories, I also stress certain best practices to maximize their comprehension and persuasiveness.

Keep it Simple

An investment story should not be overcomplicated or filled with technical jargon. It doesn’t need to be “dumbed down,” but it should be clear and concise enough that a portfolio manager or salesperson can explain the core story in a conversational manner in no more than a couple minutes.

Avoid Cliches

 Too many firms rely on overused phrases like “top-down,” “bottom-up.” “repeatable process,” “combined quantitative and qualitative approaches,”“disciplined investment process,” and “best ideas portfolios.”

Try to use descriptive language instead of clichés. For example, instead of using a buzz-phrase like “We use bottom-up research,” say “We focus our research on identifying individual companies with strong growth potential.”If you have to use jargon, define it.

Related: Time to Rethink Your 2018 Growth Strategy Now


Once you’ve come up with a working version of a new investment story, show it to selected members of your investment, sales, marketing and client service teams to get their reactions. You may also want to show it to longtime advisor or institutional clients to get their positive and negative reactions. This market research may identify issues that need to be fixed before the story is finalized.

Know Your Audience(s)

 When you’ve finalized the core story, incorporate it across all investor communications, including your web site, marketing materials, pitchbooks,fact sheets, email marketing, social media, RFPs and consultant databases. You may also need to revise product-specific materials as well, such as fund brochures where the investment objective contradicts your updated investment story.

For due-diligence focused audiences such as advisors and institutional consultants, you’ll need to demonstrate the connection between your investment story and its results.Without necessarily getting into minutiae, provide examples of how following this process guided decisions that resulted in positive outcomes.

Moving forward, any new content your firm creates—fund commentaries, whitepapers,and videos—should reflect all key elements of your story.

If communicated effectively, the intended audience—whether it’s an advisor, institutional consultant, or retail investor—should think, “This process makes sense, and is one I wish I could implement on my own—if I had the expertise and resources.”

Get Everyone on the Same Page

It’s not enough to communicate your investment story in marketing and sales materials. Everyone in the companyshould be able clearly articulate it to clients, prospects and journalists.

The best way to make sure everyone has the story straight is to hold educational sessions—preferably in person and facilitatedby senior executives or external training professionals. Trainers should provide examples of how this process has delivered positive results, conduct simulated client and prospect meetings, and be prepared to ask tough questions.

Your investment story needs to be more than words on a screen or page. It should serve as a set of guiding principles for investment managers, a motivational theme for salespeople, and a trust-building manifesto for clients and prospects.

Dan Sondhelm
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Dan Sondhelm is the CEO of Sondhelm Partners, a firm designed to help financial clients attract investors, strengthen distribution and build brands. Dan was nominated by ... Click for full bio

All the Talk of an Accelerating Economy and Rising Inflation Just Doesn't Add Up

All the Talk of an Accelerating Economy and Rising Inflation Just Doesn't Add Up

The biggest news for the markets this week came from the Federal Reserve. On Wednesday, it released the January Federal Open Market Committee meeting notes and they were interpreted as dovish by some and hawkish by others as analysts raced to divine insight from the text.

The recent data isn’t supporting the narrative of accelerating global growth and inflation while equities continue to experience higher volatility.  What does it mean for stocks, bonds and yields? Glad you asked! Here’s my take on why all the talk on an accelerating economy and rising inflation just doesn't add up when you look at the data.

Equity Markets — A Relatively Narrow Recovery

The shortened trading week opened Tuesday with every sector except technology closing in the red. The S&P 500 fell back below its 50-day moving average after Walmart (WMT) reported disappointing results, falling over 10% on the day, having its worst trading day in over 30 years.

Walmart’s online sales grew 23% in the fourth quarter, but had grown 29% in the same quarter a year prior and were up 50% in the third quarter. We saw further evidence of the deflationary power of our Connected Society investing theme as the company reported the lowest operating margin in its history.

Ongoing investment to combat Amazon (AMZN) and rising freight costs — a subject our premium research subscribers have heard a lot of about lately — were the primary culprits behind Walmart's declining numbers. To really rub salt in that wound, Amazon shares hit a new record high the same day. This pushed the outperformance of the FAANG stocks versus the S&P 500 even higher.

Wednesday was much of the same, with most every sector again closing in the red, driven mostly by interpretations of the Federal Reserve’s release of the January Federal Open Market Committee meeting notes. In fact, twenty-five minutes after the release of those notes, the Dow was up 303 points . . . and then proceeded to fall 470 points to close the day down 167 points. To put that swing in context, so far in 2018, the Dow has experienced that kind of a range seven times but not once in 2017.

Thursday was a mixed bag. Most sectors were flat to slightly up as the S&P 500 closed up just +0.1%, while both the Russell 2000 and the Nasdaq Composite lost -0.1%. The energy sector was the strongest performer, gaining 1.3% while financials took a hit, falling 0.7%.

The recovery from the lows this year has been relatively narrow. As of Thursday’s close, the S&P 500 is still below its 50-day moving average, up 1.1% year-to-date with the median S&P 500 sector down -1.0%. Amazon, Microsoft and Netflix alone are responsible for nearly half of the year’s gain in the S&P 500. The Russell 2000 is down -0.4% year-to-date and also below its 50-day moving average. The Dow is up 78 points year-to-date, but without Boeing (BA), would be down 317 points as two-thirds of Dow stocks are in the red for the year.

Related: We're Back to “Bad News is Good News” and “Good News is Great News”

Fixed Income and Inflation — the Coming Debt Headwind

The 1-year Treasury yield hit 2.0%, the highest since 2008 while the 5-year Treasury yield has risen to the highest rate since 2010, these are material moves!

What hasn’t been terribly material so far is the Fed’s tapering program. It isn’t exactly a fire sale with the assets of the Federal Reserve down all off 0.99% since September 27 when Quantitative Tightening began, which translates into an annualized pace of 2.4%.

As for inflationary pressures, U.S. Import prices increased 3.6% year-over-year versus expectations for 3.0%, mostly reflecting the continued weakness in the greenback. The Amex Dollar Index (DXY) has been below both its 50-day and 200-day moving averages for all of 2018. The increase in import prices excluding fuel was the largest since 2012 and also beat expectations. Import prices for autos, auto parts and capital goods have accelerated but consumer good ex-autos once again moved into negative territory.

Outside the U.S. we see little evidence that inflation is accelerating. Korea’s PPI fell further to 1.2% - no evidence of rising inflation there. In China the Producer Price Index fell to a 1-year low – yet another sign that we don’t have rising global inflation. On Friday the European Central Bank’s measure of Eurozone inflation for January came in at 1.3% overall and has been fairly steadily declining since reaching a peak of 1.9% last April. This morning we saw that Japan’s Consumer Price Index rose for the 13th consecutive month in January, rising 0.9% from year-ago levels. Excluding fresh food and energy, the increase was just 0.4% - again, not exactly a hair-on-fire pace.

The reality is that the U.S. economy is today the most leveraged it has been in modern history with a total debt load of around $47 trillion. On average, roughly 20% of this debt rolls over annually. Using a quick back-of-the-envelope estimate, the new blended average rate for the debt that is rolling over this year will likely be 0.5% higher. That translates to approximately $250 billion in higher debt service costs this year. Talk about a headwind to both growth and inflationary pressures. The more the economy picks up steam and pushes interest rates up, the greater the headwind with such a large debt load… something consumers are no doubt familiar with and are poised to experience yet again in the coming quarters.

The Twists and Turns of Cryptocurrencies

The wild west drama of the cryptocurrency world continued this week as the South Korean official who led the government’s regulatory clampdown on cryptocurrencies was found dead Sunday, presumably having suffered a fatal heart attack, but the police have opened an investigation into the cause of his death.

Tuesday, according to Yonhap News, the nation’s financial regulator said the government will support “normal transactions” of cryptocurrencies, three weeks after banning digital currency trades through anonymous bank accounts. Yonhap also reported that the South Korean government will “encourage” banks to work with the cryptocurrency exchanges. Go figure. Bitcoin has nearly doubled off its recent lows.

Tuesday the crisis-ridden nation of Venezuela launched an oil-backed cryptocurrency, the “petro,” in hopes that it will help circumvent financials sanctions imposed by the U.S. and help improve the nation’s failing economy. This was the first cryptocurrency officially launched by a government. President Nicolás Maduro hosted a televised launch in the presidential palace which had been dressed up with texts moving on screens and party-like music stating, “The game took off successfully.” The government plans to sell 82.4 million petros to the public. This will be an interesting one to watch.

Related: Warning: Suppressed Volatility Ultimately Leads to Hyper-Volatility

Economy — Maintaining Context & Perspective is Key

Housing joined the ranks of U.S. economic indicators disappointing to the downside in January with the decline in existing home sales. Turnover fell 3.2%, the second consecutive decline, and is now at the lowest annual rate since last September. Sales were 4.8% below year-ago levels while the median sales price fell 2.4%, also the second consecutive decline and this marks the 6th decline in the past 7 months. U.S. mortgage applications for purchase are near a 52-week low.

Again, that’s the latest data, but as we like to say here at Tematica, context and perspective are key. Looking back over the past month, around 60% of the U.S. economic data releases have come in below expectations and this has prompted the Citigroup Economic Surprise Index (CESI) to test a 4-month low. Sorry to break it to you folks, but the prevailing narrative of an accelerating economy just isn’t supported by the hard data. No wonder that even the ever-optimistic Atlanta Fed has slashed its GDPNow forecast for the current quarter down to 3.2% from 5.4% on Feb. 1. We suspect further downward revisions are likely.

Looking up north, it wasn’t just the U.S. consumer who stepped back from buying with disappointing retail sales as Canadian retail sales missed badly, falling 0.8% versus expectations for a 0.1% decline. Over in the land of bronze, silver and gold dreams, South Korean exports declined 3.9% year-over-year.

Wednesday’s flash PMI’s were all pretty much a miss to the downside. Eurozone Manufacturing PMI for February declined more than was expected to 58.5 from 59.6 in January versus expectations for 59.2. Same goes for Services which dropped to 56.7 from 58 versus expectations for 57.7. France and Germany also saw both their manufacturing and services PMIs decline more than expected in February. The U.K. saw its unemployment rate rise unexpectedly to 4.4% from 4.3%

The Bottom Line

Economic acceleration and rising inflation aren’t showing up to the degree that was expected, and this was a market priced for perfection. The Federal Reserve is giving indications that it will not be providing the same kind of downside protection that asset prices have enjoyed since the crisis, pushing markets to reprice risk and question the priced-to-perfection stocks.

Lenore Elle Hawkins
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Lenore Hawkins serves as the Chief Macro Strategist for Tematica Research. With over 20 years of experience in finance, strategic planning, risk management, asset valuation an ... Click for full bio