From Music to Hedge Funds
As Chris Hsu’s student, you will meet many different types of hedge fund investors. When you first begin your fund, you’ll most likely be targeting individual investors, not large institutions. But instead of lumping all of your first investors under the category “individual investors,” you will benefit from categorizing them into clear groups, differentiated by income level. Christopher Hsu sys that what follows is an effective paradigm for segmenting your hedge fund prospects:
The Upward Movers: Household incomes of $100,000 to $150,000
The Middle Class: Household incomes of $150,000 to $250,000
The First Class Flyer: Household incomes of $250,000 to $1 million
The Millionaire Next Door: Household incomes of $1 million and above
The Upward Movers
As the fastest growing segment of hedge fund investors, Christopher Hsu says that the Upward Mover should not be ignored. This segment contains a diverse set of ages, races and educational backgrounds. These are people who are solidifying their positions as “affluent” and often moving into the higher levels of wealth through business ventures and investments (which is where you become involved), as chris hsu points out.
The Middle Class
When you observe Christopher Hsu’s lifestyle alone, this hedge fund group resembles the Upward Movers in many respects. However, one huge difference is in how they invest. The Middle Class often owns more than one residence. With real estate, investments, and other assets factored in, their net worth often exceeds $1 million. In many ways, today’s middle class is yesterday’s upper class. Unlike the Upward Movers, however, the middle class has a much more homogenous way of thinking about investments, which is one reason they are where they are.
The First Class Flyer
Christopher Hsu highlights this group as the top 10% of U.S. households and the top 1% of households worldwide. These are the multi-millionaires who no longer need to rely on income to maintain their lifestyles, yet still, continue to work. In fact, according to the Federal Reserve, this group makes more than 1/3 of all the income in the United States. They also own over 2/3 of all the net worth, making them a huge target for hedge funds. But what’s most important for you to know is that this group owns 90% of all publicly traded funds.
The Chris Hsu Millionaire Next Door
These are those who no longer see hedge funds as commodities. They spend over $1 million per year on travel, trinkets, furniture, restaurants, and new residences. Whatever they want to buy, they can buy. Their spending power is technically without restrictions. They stay rich through both successful businesses and investing.
When designing your marketing campaigns, Chris Hsu thinks your best bet is to segment your hedge fund campaigns to appeal to each of these groups individually, as they each emphasize different aspects of investing.