Getting Organized: Pivotal Areas to Ensure the Success of a New Fund Launch

Jay Romano, Anna Czulno

Over the last 15 years, the total number of open ended funds has nearly doubled across the industry. This means that there are more opportunities than ever for Asset Managers to accelerate innovation in their fund offerings. That being said, the process by which a fund is developed and subsequently launched is complex, with a myriad of pitfalls along the way that could lead to longer timeframes, or worse, a fund structure not coming to fruition. As it is increasingly likely that Asset Managers will continue to evolve and release new funds into the marketplace over both the short and long term, below are the critical activities for Product Leads to be aware of for a smooth launch.

1. Define the Strategy – Understand the New Fund to the Minute Detail

An idea has been identified that would make for a fund that satisfies a need in the marketplace; now is the time to make that idea a strategy that can be tactically followed. A clear understanding of the objective of the fund, problem it is solving for in the marketplace, and solution it will deliver is key to advancing any further discussions of the proposed new fund. In our experience, once the table stakes have been defined, it is important to identify ancillary key parameters to make a better case for the proposition. Being able to articulate the Total Addressable Market (TAM) is essential. As Asset Managers must prioritize fund launches, significant weight will be placed behind the size of the market opportunity and total potential investor interest. It is also important to note the amount of funds in the marketplace that are in the same category as the proposal, mainly to assuage internal stakeholders that there will not be any significant cannibalization. Furthermore, a review of the competitive landscape and an articulation of how the firm is uniquely positioned to launch this fund will be helpful, along with differentiators and any concerns that might arise. Lastly, as a Product Lead, it is critical to identify the key investment team members and have them bought in on the concept. Ultimately, this will be the core group supporting the fund structure, so having them identified as early as possible will give the fund the best chance for success. If the fund objective and scope are not clearly outlined at the onset of the ideation phase, it is likely the fund idea will not be communicated effectively to key individuals and may ultimately be rejected.

2. Know the Audience – Prepare for the Groups Vetting the Fund

With the scope of the fund defined, it is time to get others to buy into the vision. While the preliminary work will make this process smoother, there are still several hurdles along the way. The first of which is receiving approval from the organization to allocate additional resourcing and support for the fund launch. As part of this process, the idea will be vetted against other proposed fund launches and either greenlit or rejected. It is important to know who the key decision-makers are and what they are looking for before presenting the fund concept. The core team will need to explain the concept to this group and share with them all the details prepared previously (see Step 1: Define the Strategy). Questions involving sequencing, channel structure, distribution, etc. should be expected. Ideally this conversation could be completed after one session, but as the senior team looks to make an investment in the concept, do not be surprised if discussions last months as to continue to refine the fine details. In our experience, the more prepared a Product Lead is, the more likely the launch will be greenlit, while the inadequately prepared may suffer further delays.

3. Establish the Team – Bring in all the Right People to Make the Fund a Reality

After the fund is successfully approved, the real challenge begins. At this stage, the fund has cleared a large hurdle, and its chances of seeing the market have increased dramatically. With that, the team must be expanded to ensure requisite support and focus. That means involving teams from Marketing, Sales, Product, Operations, Distribution, Finance, Legal, Compliance, Technology, and potentially others. The entire department will not be required for each of these groups, rather just one to three representatives from each on a partially dedicated basis. However, should the fund be looking to engage third party vendors, there may be a need for additional sets of hands from a specific group. It will then be necessary to bring this group together to introduce the fund and where support is needed from each of the respective. As individuals from these teams have additional responsibilities within the firm, it is important to clearly outline expectations of involvement for this fund launch including key deadlines and workstream deliverables. Creating a detailed plan of all the key activities will also help the new teams get acclimated and will certainly increase the chances of pushing the fund forward to meet a potential deadline. Without this detail, Product Leads might open themselves up to surprise delays or new processes. Remember, this is an extra responsibility for several individuals, so the more communication on the needs of the fund to them and allowing for flexibility on their own terms will go a long way to creating an efficient team.

4. Meet the Team Regularly – Connect with the Team to Manage the Pace

With the fund team kicked off and activities underway, what is next for Product Leads? In our experience, now is the time where it is vital to let the team work and be there for them if there are any questions. Some teams operate differently, but at a minimum, it is the Product Lead’s responsibility to ensure that known issues are not going unmanaged. While cross-functional dependencies between teams may seem apparent, it is vital that the Project Management team ensures the correct individuals are aligned to complete all tasks. It is recommended to meet with the broader team once a week; however, certain situations may lead to a higher frequency of meetings with specific teams (e.g., making sure all regulatory documentation is complete) but that is up to you and the broader team. Meeting with the group once a week will help bring everyone together and provide an opportunity for open dialogue and problem-solving between teams. During this time, the core members can also discuss any potential issues or key decisions that need to be made so that anyone affected will be aware of the changes. The sooner a potential issue is brought up, the sooner the team can huddle to solve for it. These sessions also drive home the concept that the fund will be associated with this team of individuals moving forward.

5. Close the Launch – Finalize every Item to Make the Launch Real

After all this hard work, now it is time for your vision to come to fruition and for the fund to be launched. With the formal launch and potential subscriptions on the horizon, it is essential to create and manage an outstanding activity checklist with the team. This means reviewing that all legal documents are complete, the fund has an articulated Go-To-Market plan, there is ideally an anchor partner or key sales opportunity(ies), profit and loss projections have been made, the seeding strategy has been defined, as well as many other critical items (if applicable). In our experience, to prepare this checklist, it is suggested that Fund Leads refer to the “Establish the Team” section and divide activities from this list into two major categories: Pre-Subscription Launch and Post-Subscription launch. Take the must haves for day one and prioritize, then, as the fund launches and things begin to wind down, focus on remaining post-launch activities, and move towards business as usual.

While not an exhaustive list of areas that need to be focused on for the success of a fund, our list highlights key warnings. Funds can falter in countless parts of the cycle. However, by following these suggestions, we believe it will make the fund launch process easier as the fund launch escalates and hits the market.

About the Authors

Jay Romano
Manager, Toronto

Jay is a Manager at Alpha with more than 5 years of consulting experience. Jay has also spent an additional 5 years in the Financial Services Industry primarily as a Corporate Auditor. Most recently, Jay has managed the launch of several products across Equity, Real Estate, and Insurance platforms. He also was a leading manager for the due diligence and post-acquisition integration of a major Asset Manager’s acquisition of a Wealth Manager, focusing specifically on running the activities for Distribution, Marketing, and Technology.

Anna Czulno
Analyst, New York

Anna is a business analyst in the New York office with experience across a wide range of practice areas including Distribution, Investments, and M&A. Among her previous projects, Anna supported from a project management perspective in the integration of three workstreams as part of an acquisition and assisted in the development of an enterprise-wide product launch framework. Most recently, Anna has focused within distribution strategy where she has played a key role in a Marketing target operating assessment.