Hedge Funds within Hedge Funds

 

A growing number of prominent hedge funders are also quietly cordoning off private enclaves within Hedge funds for themselves. These include big-name firms like Eric Mindich, Dan Och and others who have created what are known as single family offices. Not everyone is happy about it. Critics say managers should focus on their hedge funds.

“I expect hedge fund managers to be 100 percent invested in their hedge funds,” said Karl Scheer, chief investment officer of the $1.2 billion endowment at the University of Cincinnati. “I prefer that they’re singularly focused in order to achieve the best results.”

As you can see the potential of conflicts-of-interest where Fund Managers leverage the large fund for their private enclaves. This is how Goldman Sachs was able to bet against their private-equity clients during the Global Financial Crisis of 2008.

 

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