Family Office Seeds Alternative Mutual Fund With $100M

Jan 7 2014 | 2:06am ET

One major hedge fund investor is taking a big shot at a lower-fee alternative.

New York-based family office Summer Road has pulled about half of its investments from hedge funds and pledged it to a new mutual fund of hedge funds headed by hedge fund manager Brad Balter. Balter's eponymous Long/Short Equity Fund debuted last week with $100 million, all of it from Summer Road.

The new fund has two underlying managers so far: Apis Capital Advisors and Midwood Capital Management. Both firms have produced annualized returns of about 10% since inception, and both will run the same strategy for Balter as they do for their own hedge funds, albeit for less money: Apis and Midwood charge their hedge fund clients 1.5% for management and 20% for performance, while Balter's new fund will charge just 2.19% to 2.54%.

"We've analyzed the equity long/short space pretty carefully, and the lack of consistency of returns coupled with very high fees led us to conclude that the alternative mutual fund product type was a superior value," Summer Road President David Sackler told CNBC. "It's just a better mousetrap."


In Depth

GSAM’s Papagiannis on Liquid Alternatives

May 25 2016 | 5:07pm ET

The popularity of liquid alternatives strategies has blossomed in recent years,...

Lifestyle

From Modern Trader: Stephen Curry is a Black Swan

May 18 2016 | 7:43pm ET

What do the rise of the Internet, the sinking of the Titanic, 9/11, and Stephen...

Guest Contributor

LendingClub and the Question of Internal Hedge Funds

May 19 2016 | 8:42pm ET

Peer-to-peer lending platform LendingClub Corp. has been in the news since the firm...