Family Offices Question Hedge Fund Relationships

April 17, 2009   M. Corey Goldman

Family offices and hedge funds are changing the terms of their long-standing affair.

It seemed a match made in heaven — hedge funds and family offices, naturally discreet partners with a strong mutual attraction. The former sought long-term commitment; the latter pined for uncorrelated returns.

But even the most outwardly perfect of couples can suffer a rough patch, and that’s what seems to have happened over the past several months as family offices — big and small, single and multiple, old and new — have questioned just how solid their relationship with hedge funds is after the way some managers have performed, and behaved, in recent months.

"From my perspective, the last year has been extremely disappointing," says Max Schmid, a managing director at London-based Fortune Asset Management, which advises on more than $5 billion in assets, much of it belonging to wealthy European families. "There were clearly managers just riding waves without much skill, and when the wave broke, they broke with it. It...


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