Elana Margulies

14/06/2011 Author: Elana Margulies

Family offices require a different approach 

In an industry where difference and diversification count for everything, few hedge funds acknowledge this need for distinction when pitching clients. Whether they are an institutional behemoth or a bespoke family office, the marketing effort often remains identical; a one-size-fits-all approach that frequently leads to confusion, and a failure to raise capital.

This lack of distinction was one of the themes discussed at last week’s HFMWeek US Breakfast Briefing on family offices and hedge funds. The panel, featuring Joseph Reilly, president of the Family Office Association; Ji-mei Ma, private investing at Nebula Capital; Anthony Gordon, principal of the Gordon Family Office; and Neal Berger, founder of Eagle’s View Asset Management, all agreed that funds had to better tailor their marketing efforts.

Reilly said that hedge funds can’t target family offices in the same way they seek investments from pensions. “Family offices need some connection to the manager, some feeling that they can trust this person with their capital,” he said. “Families tend to allocate for the long run and feel the need to have some sort of relationship with this manager.”

The family offices represented on the panel varied in their current outlook toward manager opportunities. Ma said she looks for strategies that provide true diversification. Gordon, whose investments are in three buckets – hedge funds, long-only managers and CTAs – said he prefers to invest in managers who start a trend, rather than follow one.

Finally, Berger said he shies away from mainstream strategies such as long/short and prefers ones with an edge, referencing electricity arbitrage trading as an example.

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