European Institutions

The preparedness of European institutions to purchase either managed derivatives funds or programmes varies across the continent and is dependent upon a series of factors some of which may be addressed by marketing.

1. The regulatory (and tax) environment;
2. general familiarity with the derivatives and managed derivatives industry;
3. familiarity with the fund management group attempting to sell product;
4. presence and format of a track record (at least for past funds if a new product is offered);
5. money under management within the fund group;
6. technical expertise within the fund group;
7. performance aspirations for the fund or investment programme;
8. quality and content of the explanatory/sales materials;
9. financial considerations such as fees implicit within the fund or programme.

Regulatory and Tax Environment

Clearly, marketing techniques (except political lobbying which is almost inevitably the function, in Europe, of trade associations) can have little impact on the regulatory and tax environment whose absence of clarity in certain European countries inhibits institutional enthusiasm for managed derivatives products.

That said, experiences cited by fund managers prove that it is a serious marketing error to make general assumptions based on perceived regulatory problems within a country or financial centre and on a negative reception fromthe first batch of institutions contacted.

Indeed, at least one major fund group preferentially employs salesmen withoutsignificant derivatives experience to overcome preconceptions about the impossibility of sales to certain types of institutions or within certain geographical areas — with very successful results.

It is, however, possible to make assumptions about better and worse institutional prospects particularly in the context of more or less receptive countries or financial centers. In broad terms centers with derivatives exchanges include banks and other financial institutions familiar, to some degree, with the derivatives business. This can be because either at worst the exchange generates press coverage or at best because the institution in question is a trading member.

This is not to say that the gap between derivatives understanding and managed derivatives investment is narrow but it does serve to enable fund management companies and others contemplating a marketing/sales campaign to make somechoices about suitable areas on which to focus.

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