This an excerpt from a note to clients from one of the world's largest investment dealers explaining the disastrous performance of two of its hedge funds:
"Let me take this opportunity to provide you with an update on the status of the High-Grade Structured Credit Strategies and High-Grade Structured Credit Strategies Enhanced Leveraged Funds managed by XXXXXX... The preliminary estimates show there is effectively no value left for the investors in the Enhanced Leverage Fund and very little value left for the investors in the High-Grade Fund...
This is a difficult development for investors in these Funds...We will work to continue to provide you with the high quality products and services you have come to expect from XXXXX."
With all due respect to whoever penned this communication, it could have benefited from some -- how shall I put this? -- sensitivity editing. If I was an investor, I would not be heartened by the knowledge that the firm has taken "this opportunity" (I suggest it had no choice) to tell me there is "effectively no value left" (I have likely lost all my money).
And is "difficult development" really a finely tuned way of capturing the impact of the meltdown on investors? Wouldn't 'terrible', 'devastating' or even 'dispiriting' come a little closer to the truth? And does it really matter to me as an investor that your other products are "high quality" . . . evidently these two funds were just not part of that high quality portfolio and tradition of service? I assume investors would have liked to have known that in advance.
Words have power. They can be marshalled in your favour. Or they can add to your reputation deficit. There is a reason why communicators pay such attention to messaging . . . because the result of undervaluing the impact of words on reputation is, well, dispatches like this.