Are more hedge funds going to become family offices - yes
Hedge funds aren’t doing well in terms of performance - that will just increase the number of family offices.
A recent report
by Citi, a US bank, on the global hedge fund industry found that assets
in the sector fell in August this year by $78.4 billion, the biggest
fall since October 2008 when the financial crisis was at its most
potent. Hedge funds, set up originally to “hedge” against falling
markets, don’t seem to like volatile markets like the ones of the last
few months. But maybe there is something more fundamental happening.
Because
bad performance, coupled with regulatory pressures, will likely see
more hedge funds turn themselves into family offices, as they seek
refuge in family-only investments, where regulatory and client pressures
are pretty much absent.
The latest hedge fund manager to convert
his fund into a family office is John Brynjolfsson, the chief investment
officer of Armored Wolf, a California based hedge fund. Brynjolfsson
said he is closing his hedge fund to outside investors and converting it
into a family office to manage his own money.
In an interview with Bloomberg,
Brynjolfsson added that he was looking forward to a sabbatical and that
the five-year bear market in commodities had made the decision easier.
Numerous hedge funds managers have already converted their funds into
family offices; notable investors who’ve made the move include George
Soros, Carl Icahn, John Thaler and Stanley Druckenmiller.
As Family Capital reported
recently, a number of other hedge fund managers might not have quit
their day jobs running hedge funds but have set up family offices. This
has led to some questions about a possible conflict of interest in
terms of the advice they’re giving their hedge funds clients and what
they’re investing in at their family office. The US Securities and
Exchange Commission seems to be aware of the problems and may crackdown
soon, say people close to the regulator.
Given performance
pressures and potential regulatory difficulties more hedge fund managers
may also be thinking about following the herd and moving all their
investments into their family office - and saying goodbye to the
wonderful world of hedge funds.
A recent report
by Citi, a US bank, on the global hedge fund industry found that assets
in the sector fell in August this year by $78.4 billion, the biggest
fall since October 2008 when the financial crisis was at its most
potent. Hedge funds, set up originally to “hedge” against falling
markets, don’t seem to like volatile markets like the ones of the last
few months. But maybe there is something more fundamental happening.
Because
bad performance, coupled with regulatory pressures, will likely see
more hedge funds turn themselves into family offices, as they seek
refuge in family-only investments, where regulatory and client pressures
are pretty much absent.
The latest hedge fund manager to convert
his fund into a family office is John Brynjolfsson, the chief investment
officer of Armored Wolf, a California based hedge fund. Brynjolfsson
said he is closing his hedge fund to outside investors and converting it
into a family office to manage his own money.
In an interview with Bloomberg,
Brynjolfsson added that he was looking forward to a sabbatical and that
the five-year bear market in commodities had made the decision easier.
Numerous hedge funds managers have already converted their funds into
family offices; notable investors who’ve made the move include George
Soros, Carl Icahn, John Thaler and Stanley Druckenmiller.
As Family Capital reported
recently, a number of other hedge fund managers might not have quit
their day jobs running hedge funds but have set up family offices. This
has led to some questions about a possible conflict of interest in
terms of the advice they’re giving their hedge funds clients and what
they’re investing in at their family office. The US Securities and
Exchange Commission seems to be aware of the problems and may crackdown
soon, say people close to the regulator.
Given performance
pressures and potential regulatory difficulties more hedge fund managers
may also be thinking about following the herd and moving all their
investments into their family office - and saying goodbye to the
wonderful world of hedge funds.
Are more hedge funds going to become family offices - yes — Family Capital
